The Risk That the Rate of Return on an Investment

question 95

Multiple Choice

The risk that the rate of return on an investment will be less than expected due to factors that are independent of the investment, such as political, social or economic events, is called

• A) business risk.
• B) financial risk.
• C) market risk.
• D) liquidity risk.

Identify which accounts are increased by debits and which by credits.

Familiarize with the correct abbreviations and terminology used in accounting.

Apply the rules of debits and credits to specific transactions.

Recognize the treatment of owner's equity accounts in relation to debits and credits.

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Definitions:

Consumer Surplus

The benefit obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay.

Optimal Consumption

refers to the situation in which a consumer allocates their income in a way that maximizes their overall satisfaction or utility, given their preferences and the prices of goods and services.

Demand Schedule

A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to purchase at various prices.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good.