You Have the Following Rates of Return for a Risky

question 34

Multiple Choice

You have the following rates of return for a risky portfolio for several recent years:
-If you invested $1,000 at the beginning of 2005 your investment at the end of 2008 would be worth ___________.

• A) $2,176.60
• B) $1,785.56
• C) $1,645.53
• D) $1,247.87

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Definitions:

Variable Inputs

Resources used in production that can vary in quantity in the short run, such as labor and raw materials.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Fixed Inputs

Resources used in production that cannot be easily increased or decreased in the short term, such as buildings or machinery.

Variable Inputs

Resources or factors of production whose quantity can be changed in the short term to influence output.