Which of the Following Statements Is Correct

question 25

Multiple Choice

Which of the following statements is correct?

• A)The dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor.
• B)A dominant portfolio is one that has the highest risk and highest return within a set of portfolios.
• C)By adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk.
• D)None of these statements is correct.

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Definitions:

Natural Rate

The equilibrium unemployment rate arising from all sources except cyclical fluctuations, often considered the normal level of unemployment in an economy.

Continuous Inflation

Continuous inflation refers to a sustained increase in the general price level of goods and services in an economy over a period of time, eroding purchasing power.

Natural Rate of Unemployment

The level of unemployment that is expected in an economy without temporary fluctuations, often seen as the equilibrium state of the labor market.

Inverse Relationship

A situation where two variables move in opposite directions, meaning when one variable increases, the other decreases.