A Good Is Normal for a Consumer If

question 42

Multiple Choice

A good is normal for a consumer if

• A) it is always consumed in a consistent quantity.
• B) its consumption rises when income rises.
• C) its consumption falls when income rises.
• D) some minimal level of the good must be consumed to assure the consumer's survival.
• E) the assumption of "more is always preferred to less" holds.

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility than the market.

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.

CML

The Capital Market Line, representing the risk-return trade-off of efficient portfolios in the capital market theory; it shows the highest return possible for any given level of risk.

Well-Diversified Portfolios

Investment portfolios that contain a wide variety of assets to minimize exposure to any single asset or risk.