Which of the Following Is Correct of How the Returns

question 13

Multiple Choice

Which of the following is correct of how the returns on assets move together?

• A) Positive and negative deviations between assets at similar times give a negative covariance.
• B) Positive and negative deviations between assets at dissimilar times give a negative covariance.
• C) Positive and negative deviations between assets give a zero covariance.
• D) Positive and negative deviations between assets at dissimilar times give a positive covariance.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some control over price.

Oligopolistic

Pertaining to a market structure where a small number of firms dominate the industry, leading to limited competition and high barriers to entry.

Decision Variable

A variable that decision makers control in planning and decision-making processes, representing choices available to achieve an objective.

Price Takers

Economic agents who accept market prices as given because they do not have enough market power to influence those prices.