The Excess Return If the Difference Between the Average Return

question 62

Multiple Choice

The excess return if the difference between the average return on a security and the average return for:

• A) Treasury Bonds.
• B) a portfolio of securities with similar risk.
• C) a broad based market portfolio like the S&P 500 index.
• D) Treasury Bills.

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Definitions:

Capital Goods

Long-lasting goods that are used to produce other goods or services and are not sold directly to consumers.

Law of Increasing Opportunity Costs

states that as production of one good increases, the opportunity cost of producing an additional unit of this good also increases, due to factors of production not being perfectly interchangeable.

Satisfy Wants

The process of fulfilling the desires or needs of consumers through the provision of goods and services.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good changes as the quantity of production is increased.