Assuming No Cash Leakages and No Excess Reserves Held by Banks,a

question 37

Multiple Choice

Assuming no cash leakages and no excess reserves held by banks,a required reserve ratio of 0 percent would mean that the simple deposit multiplier is

• A) 0.
• B) 1.
• C) 10.
• D) 100.
• E) infinity.

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Definitions:

Portfolio Beta

An indicator of the fluctuation or inherent risk in a portfolio relative to the overall market.

Risk-Free Asset

A Risk-Free Asset is an investment that theoretically guarantees its return and has no variance in its expected payout, typically government-issued securities.

Asset Beta

A measure of the risk of an asset isolated from the firm's financial risk, particularly useful in capital asset pricing models (CAPM).

Risk-Free Asset

An investment with a guaranteed return, without any risk of financial loss.