Faruq Spends All of His Income on Tacos and Milkshakes

question 47

Multiple Choice

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.If Faruq spends all of his income,the opportunity cost of one taco equals _____ milkshakes.

• A)2
• B)10
• C)5
• D)1/5

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Definitions:

Risk-Adjusted Returns

Performance measurement that evaluates the return gained from an investment relative to the risk taken, often calculated using measures such as the Sharpe ratio.

Small Firms

Companies with a relatively small market capitalization.

Large Firms

Corporations or companies that have a significant market capitalization, extensive operations, and a widespread influence in their industries.

Market Efficiency

A concept stating that all available information is already reflected in asset prices, making it impossible to consistently achieve higher returns without assuming additional risk.