-Refer to Table 3

question 31

Multiple Choice

-Refer to Table 3.2,which shows some costs and benefits of having your car repaired.Suppose you use your car to deliver pizzas,for which you earn $10 per hour.If your mechanic lowers the amount she charges by $50,what happens to your best choice of hours to spend on car repairs?

• A) It increases by 1 hour
• B) It decreases by 1 hour
• C) It doesn't change
• D) It decreases by 2 hours

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Definitions:

Multifactor APT

A model that describes the return of a security or portfolio in relation to various risk factors and the expected return on the assets, extending the concepts of the Capital Asset Pricing Model (CAPM).

Expected Return

The average of all possible returns for an investment, weighted by the likelihood of each outcome, representing the mean of the probability distribution of returns.

APT

The Arbitrage Pricing Theory, an asset pricing model that predicts a security's returns using the linear relationship of its expected return with macroeconomic factors.

Developed

Refers to countries or regions with advanced economic systems, typically characterized by high gross domestic product (GDP) and well-developed infrastructure.