By Definition There Is No Uncertainty About the Terminal Value

question 27

Multiple Choice

By definition there is no uncertainty about the terminal value of the risk free asset for all of the following reasons EXCEPT

• A) the standard deviation of the return is one
• B) the expected return is certain
• C) the standard deviation of the return is zero
• D) the investor knows exactly what the terminal wealth will be

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Definitions:

Close-Substitute

A good or service that can easily replace another in satisfying consumer needs, with very little change in consumption patterns.

Consumer Preferences

The tastes, preferences, and priorities that individuals have regarding the consumption of goods and services.

Close-Substitute

A product or service that can easily replace another in the consumption preferences of consumers due to its similarity.

Complements

Goods or services that are consumed together because the use of one enhances the value of the other.