A Unit of Account Is

question 51

Multiple Choice

A unit of account is

• A) a standard unit that provides a consistent way of quoting prices.
• B) an asset that can be used to transport purchasing power from one period of time to another.
• C) what sellers generally accept and buyers generally use to pay for goods and services.
• D) the ability to buy something today but to defer payment to the future.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, not reducible through diversification.

Security Market Line

A line on a chart that displays the relationship between risk and the expected return of the market portfolio. It serves as a graphical representation of the Capital Asset Pricing Model (CAPM).

Beta Coefficient

A framework for quantifying the variability, or orderly risk, of a security or investment compilation when juxtaposed with the general market.

Risk Premium

The additional return an investor demands for choosing a risky investment over a risk-free option, serving as compensation for the additional risk.