Which of the Following Is a Problem Inherent in Centrally

question 73

Multiple Choice

Which of the following is a problem inherent in centrally planned economies?

• A)There are no problems and everyone,including consumers,is satisfied.
• B)There is too much production of low-cost,high-quality goods and services.
• C)Production managers are more concerned with satisfying government's orders than with satisfying consumer wants.
• D)Unemployment is too high.

Calculate portfolio beta for mixed portfolios, including stocks, risk-free assets, and the market portfolio.

Determine the systematic risk of a portfolio and how different weightings of assets affect it.

Utilize the Capital Asset Pricing Model (CAPM) to estimate the expected market return and the return on individual securities.

Analyze the relationship between risk-free rate, market risk premium, and the expected rate of return on stocks using the concept of beta.

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Definitions:

Unsystematic Risks

The portion of risk in an investment that is attributable to the specific circumstances of an individual company or industry.

Efficient Frontier

A concept in portfolio theory where an investment portfolio is said to be efficient if it offers the highest expected return for a given level of risk.

Volatility

A statistical measure of the dispersion of returns for a given security or market index, indicating how much the price of a security, derivative, or index fluctuates.

Stock Betas

An index for determining the degree of volatility, or built-in risk, that a security or a portfolio encounters in comparison with the market at large.