Suppose That a University Decides to Spend $1 Million to Upgrade

question 169

Multiple Choice

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates

• A) distorted priorities.
• B) opportunity costs.
• C) increasing opportunity costs.
• D) productive efficiency.

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Definitions:

Holding-Period Return

The total return received from holding an asset or portfolio of assets over a specified period, including interest, dividends, and capital gains.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Holding-Period Return

The total return received from holding an asset or portfolio over a period of time, considering all sources of income and capital gains.

Capital Gains Yield

The price appreciation component of the total return on an investment, calculated as the rise in the investment's price divided by its initial price.