A Nation Has a Positive Net Capital Outflow

question 157

Multiple Choice

A nation has a positive net capital outflow.Which of the following is correct?

• A)Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreigners
• B)It has positive net exports.
• C)Its savings exceeds its domestic investment.
• D)All of the above are correct.

Understand the fundamental concepts of the Capital Asset Pricing Model (CAPM) and its implications for the expected return on securities.

Apply CAPM to calculate the expected return of individual securities based on their beta, the risk-free rate, and the market rate of return.

Analyze the effects of changes in market conditions (such as changes in market rate of return and risk premium) on the expected return of securities.

Calculate portfolio beta and understand how to adjust a portfolio to achieve a desired beta.

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Definitions:

Company

A business entity created by a collection of people to conduct and manage an enterprise, whether it be for commercial or industrial purposes.

Par Common Stock

The nominal or face value of a share of common stock as stated in the corporate charter, with no direct link to the market value.

Articles Of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.

Shares

Portions of ownership in a corporation.