The Standard Deviation of a Risk-Free Asset Is

question 49

Multiple Choice

The standard deviation of a risk-free asset is:

• A)1.
• B)0.
• C)-1.
• D)any number between -1 and 1.

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Definitions:

Elastic Demand

Product or resource demand whose price elasticity of demand is greater than 1, so that any given percentage change in price leads to a larger percentage change in quantity demanded. As a result, quantity demanded is relatively sensitive to (elastic with respect to) price.

Output Effect

The change in total output resulting from adjusting the production of one good in response to price changes, while holding utility constant.

Fixed Proportions

A production process where inputs are used in strict, unchangeable ratios.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.