To Earn the Highest Possible Return in the Stock Market

question 3

Multiple Choice

To earn the highest possible return in the stock market, you will need to

• A)invest in the large cap stocks.
• B)diversify your portfolio.
• C)accept a high level of risk.
• D)buy only the stocks of large, international firms.

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Definitions:

Utility Function

A mathematical representation of how a set of goods and services are ranked according to their utility, or satisfaction, to the consumer.

Preferences

The individual choices or tastes regarding various bundles of goods, shaping demand and consumption patterns in economics.

Indifference Curves

Graphical representations in microeconomics, illustrating combinations of goods or services among which a consumer is indifferent, meaning they have no preference for one combination over the other.

Utility Function

A mathematical representation in economics that shows the relationship between the overall utility a consumer derives from different bundles of goods.