The Settlement of Share Trades Is Cumbersome Because Sellers Must

question 19

True/False

The settlement of share trades is cumbersome because sellers must supply share certificates to the clearinghouse before receiving payment from the buyer.

Differentiate among different types of risks (market risk, unique risk, firm-specific risk, diversifiable risk).

Be familiar with Markowitz portfolio theory and the concept of optimal risky portfolio.

Calculate and interpret the expected rates of return and standard deviations for portfolios.

Understand the role of correlation and covariance in portfolio risk reduction and optimization.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale.

Persistent

Continuously existing or enduring over a prolonged period.

Price Discrimination

A strategy in pricing where the same provider sells identical or nearly identical products or services for various prices across different markets or to distinct customer groups.

Production Functions

a mathematical relationship expressing the output that can be produced by a firm or economy from different combinations of factor inputs.