You Are Going to Add One of the Following Three

question 54

Multiple Choice

You are going to add one of the following three projects to your already well-diversified portfolio. Assume the risk-free rate of return is 2% and the market risk premium is 8%.If you are a risk averse investor,which project should you choose?

• A) Project 1
• B) Project 2
• C) Project 3
• D) Either Project 2 or Project 3 because the higher expected return on project 3 offsets its higher risk.

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Definitions:

Labor Market

Refers to the supply and demand for labor, where employees provide the supply and employers the demand.

High-Speed Blenders

Advanced blending machines designed to operate at very high speeds, providing efficient and thorough mixing of ingredients.

Marginal Productivities

The additional output derived from the addition of one more unit of a factor of production, keeping all other inputs constant.

Electronic Pulse

A burst of electromagnetic energy produced by a sudden electrical charge, often associated with electromagnetic weapons or natural phenomena like lightning.