A) $9,090.91
B) $10,000.00
C) $8,264.46
D) $9,523.81
F) B) and D)
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B) False
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A) Her marginal utility of wealth increases as her income increases.
B) She will always accept a bet if the probability of winning a dollar is the same as the probability of losing a dollar.
C) Her utility function is a straight line.
D) None of the above are correct.
F) A) and B)
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A) $5001 + r) + $10,500/1 + r) 2
B) $500/1 + r) + $10,500/1 + r) 2
C) $11,000/1 + r) 2
D) $5001 + r) + $10,5001 + r) 2
F) A) and D)
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A) A person adds risky stock to his portfolio.
B) A person who has narrowly avoided many accidents applies for automobile insurance.
C) A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10.
D) A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.
F) None of the above
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It is worth more if it is received in 5 ...View Answer
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A) You receive the payment 2 years from now and the interest rate is 6 percent.
B) You receive the payment 2 years from now and the interest rate is 4 percent.
C) You receive the payment 3 years from now and the interest rate is 6 percent.
D) You receive the payment 3 years from now and the interest rate is 4 percent.
F) None of the above
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A) moral hazard and market risk.
B) moral hazard and firm specific risk.
C) adverse selection and market risk.
D) adverse selection and firm specific risk.
F) C) and D)
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The future...View Answer
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A) Risk-averse people will not hold stock.
B) Diversification cannot reduce firm-specific risk.
C) The larger the percentage of stock in a portfolio, the greater the risk, but the greater the average return.
D) Stock prices are determined by fundamental analysis rather than by supply and demand.
F) B) and C)
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A) 2 percent
B) 4 percent
C) 6 percent
D) 8 percent
F) B) and C)
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A) 4 percent.
B) 6 percent.
C) 8 percent.
D) All of the above are correct.
F) All of the above
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A) Bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future.
B) Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important.
C) Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market.
D) All of the above are correct.
F) B) and D)
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$1,600/$50 = 32. The rule of 70 says tha...View Answer
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A) only market risk.
B) only firm-specific risk.
C) neither market or firm-specific risk.
D) both market and firm-specific risk.
F) A) and C)
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A) $100 saved for 2 years at 10 percent interest
B) $110 saved for 2 years at 9 percent interest
C) $120 saved for 2 years at 8 percent interest
D) $130 saved for 2 years at 7 percent interest
F) B) and C)
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A) finding the present value of a future sum of money.
B) finding the future value of a present sum of money.
C) calculations that ignore the phenomenon of compounding for the sake of ease and simplicity.
D) decreases in interest rates over time, while compounding refers to increases in interest rates over time.
F) A) and B)
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A) changes in the prices of stocks are predictable. Evidence shows that managed funds typically do better than indexed funds.
B) changes in the prices of stocks are predictable. Evidence shows that indexed funds typically do better than managed funds.
C) changes in the prices of stocks are not predictable. Evidence shows that managed funds typically do better than indexed funds.
D) changes in the prices of stocks are not predictable. Evidence shows that indexed funds typically do better than managed funds.
F) C) and D)
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A) Jarrod and Simon are both correct.
B) Jarrod and Simon are both incorrect.
C) Only Jarrod is correct.
D) Only Simon is correct.
F) A) and C)
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A) pay higher returns when interest rates rise and lower returns when interest rates fall.
B) pay lower returns when interest rates rise and higher returns when interest rates fall.
C) provide a higher return than the market average.
D) provide a lower return than the market average.
F) B) and D)
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