If Your ____,Your Net Worth on the Personal Balance Sheet

question 5

Multiple Choice

If your ____,your net worth on the personal balance sheet would have increased from one period to the next.

• A)liabilities increased and assets remained constant
• B)liabilities increased and assets decreased
• C)assets increased and liabilities remained constant
• D)income increased
• E)none of these

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Definitions:

Standard Deviation

Measures the amount of variability or dispersion around an average, reflecting the risk associated with a variable’s stability in financial contexts.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

Capital Allocation Line

A line on a graph that represents the risk-reward ratio of investments, showing the optimal portfolio mix between risk-free assets and risky assets.