$\quad$ $\quad$ $\quad$

question 3

Multiple Choice

$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Investiment } A$ $\quad$$\quad$$\quad$$\quad$$\quad$$\text { Investment } B$
$\begin{array}{|l|l|l|l|l|}\hline & \text { Good year } & \text { Bad year } & \text { Good year } & \text { Bad year } \\\hline \text { Probability } & 0.80 & 0.2 & 0.90 & 0.1 \\\hline \text { Pay-off } & 140 & 45 & 110 & 70 \\\hline\end{array}$
-The key factor in asset choice is the effect of the additional asset on the existing portfolio.To calculate the change in portfolio variance and expected return with an additional asset,what does the investor require?

• A) Expected return of the new asset
• B) Its variance
• C) The covariance between the new asset and the other assets in the existing portfolio
• D) All of these choices

Illustrate the effect of market structure on consumer choices and welfare.

Identify characteristics of imperfectly competitive industries.

Understand the relationship between the number of substitutes and a monopolist's power to raise prices.

Distinguish between perfectly and imperfectly competitive markets.

---

Definitions:

Overseas Supplier

A foreign entity that provides goods or services to businesses in another country, often sought for cost savings or access to specific markets.

Variable Expenses

Expenses that fluctuate with business activity levels, such as sales commissions or raw material costs.

Transfer Price

The cost at which various segments of a corporation conduct transactions amongst themselves, including the exchange of materials or workforce among different departments.

Transfer Price

The price at which goods and services are sold between divisions within the same company or to a subsidiary.