"Monotonicity" Is the Requirement of a Risk-Measure That If Portfolio

question 4

Multiple Choice

"Monotonicity" is the requirement of a risk-measure that if Portfolio A dominates Portfolio B (in the sense of always doing at least as well as B in every state of the world and strictly better in some states) , then the risk of Portfolio A should be less than the risk of Portfolio B. Which of the following statements is correct?

• A) Standard deviation (SD) fails to satisfy monotonicity.
• B) Value-at-Risk (VaR) fails to satisfy monotonicity.
• C) Expected shortfall (ES) fails to satisfy monotonicity.
• D) All three of these portfolio risk-measures (SD, VaR, and ES) fail monotonicity.

Identify the purposes and impacts of specific taxes such as excise taxes and sales taxes.

Grasp the concept of tax incidence and how it affects producers and consumers differently depending on the elasticity of supply and demand.

Understand the employment distribution in government sectors at the federal, state, and local levels.

Analyze the progressive nature of the federal tax system versus the regressive nature at other levels.

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Definitions:

Allocative Efficiency

Allocative efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, matching consumer preferences with production.

Productive Efficiency

A state where an economy or entity is operating in such a way that it cannot produce more of one good without reducing the output of another good.

Minimum ATC

The lowest point on the average total cost curve, representing the most efficient scale of production.

Purely Competitive Market

An idealized market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to perfect competition.