A. uncertainty associated with the entire economy
B. uncertainty associated with specific companies
C. risk associated with adverse selection
D. risk associated with moral hazard
Related Mcqs:
- The normal rate of profit for relatively risk-free firms will be _________ the interest rate on risk-free government bonds?
A. approximately one-half
B. smaller than
C. larger than
D. approximately equal to - Which of the following does not help reduce the risk that people face ?
A. increasing the rate of return within their portfolio
B. diversifying their portfolio
C. All of these answers help reduce risk
D. buying insurance - If people are risk averse, then ?
A. None of these answers are true
B. All of these answers are true
C. They dislike bad things more than the like comparable good things
D. The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
Their utility function exhibit the property of diminishing marginal utility of wealth - Which of the following reduces risk in a portfolio the greatest ?
A. Increasing the number of shares from 10 to 20
B. All of these answers provide the same amount of risk reduction
C. Increasing the number of shares in the portfolio from 1 to 10
D. Increasing the number of shares from 20 to 30 - Credit risk refers to a bond’s ?
A. Probability of default
B. Price-earnings ratio
C. dividend
D. tax treatment - In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of ?
A. moral hazard
B. risk aversion
C. adverse selection
D. a poor gamble - The reduction or covering of foreign exchange risk is called ?
A. hedging
B. speculation
C. intervention
D. arbitrage - If a depositor puts Rs100 in a bank amount that earns 4 percent interest compounded annually, how much will be in the account after five years ?
A. Rs400.00
B. Rs 104.00
C. Rs 121.67
D. Rs 123.98 - An increase in the prevailing interest rate ?
A. increases the present value of future returns from investment and increases investment
B. decreases the present value of future return from investment and decreases investment
C. decreases the present value of future returns from investment and increase investment
D. increases the present value of future returns from investment and decreases investment - Speculative bubbles may occur in the shares market ?
A. during periods of extreme pessimism because so many stocks become undervalued
B. only when people are irrational
C. when stocks are fairly valued
D. because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date
