Market Participants Are Likely to Save a Portion of Current

question 126

Multiple Choice

Market participants are likely to save a portion of current income if they

• A) Place a higher value on future consumption than on current consumption.
• B) Place a higher value on current consumption than on future consumption.
• C) Believe that banks might fail.
• D) Believe that money will lose much of its value in the future.

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Definitions:

Government Regulation

Laws and rules established by governmental agencies aimed at controlling the way businesses can operate within the economy.

Systematic Risk

A hazard inherent to the entire market or a market segment, which diversification cannot diminish.

Unsystematic Risk

Refers to the risk that is specific to a company or industry, and can be mitigated through diversification.

Portfolio Beta

A measure of the sensitivity of a portfolio's returns to the returns of the overall market, indicating the level of market risk associated with the portfolio.