In the ATM Model of the Demand for Cash, If

question 7

Multiple Choice

In the ATM model of the demand for cash, if a person's daily amount of spending increases, then

• A)the number of days between visits to the ATM falls and the quantity of money demanded rises.
• B)the number of days between visits to the ATM rises and the quantity of money demanded falls.
• C)both the number of days between visits to the ATM and the quantity of money demanded rises.
• D)both the number of days between visits to the ATM and the quantity of money demanded falls.

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Definitions:

Sharpe Measure

A metric used to evaluate the risk-adjusted return of an investment, calculating the difference between the returns of the investment and the risk-free rate, divided by the standard deviation of the investment’s returns.

Beta

A criterion for quantifying the instability or systematic risk of a security or a portfolio in contrast to the market as a whole.

Treynor Measure

A performance metric for determining how well an investment compensates the investor for taking a risk, adjusted for the risk-free rate.

Beta

A rephrasing: A statistical estimate of a security's sensitivity to market movements, used to gauge its risk in comparison to the broader market.