-Consider Figure 9.2.The Line Represents Short-Run Fluctuations

question 21

Multiple Choice

-Consider Figure 9.2.The line represents short-run fluctuations,
) Since 1950,the largest boom was in about __________ and the deepest recession was in about __________.

• A)1983;1965
• B)1974;1976
• C)2000;1983
• D)1966;1983
• E)The economy always produces at its potential.

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Definitions:

Portfolio Opportunity Set

The expected return–standard deviation pairs of all portfolios that can be constructed from a given set of assets.

Efficient Frontier

A portfolio optimization concept that plots the best possible return for a given level of risk based on various asset combinations.

Optimal Risky Portfolio

The optimal risky portfolio is the combination of risky assets that provides the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Risk Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government securities like U.S. Treasury bonds.