Author Question: A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following ... (Read 17 times)

daltonest1984 · **on:** Jun 30, 2018

A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?
a. The higher the risk of an asset, the lower the expected return on the asset.
b. There is usually no relationship between risk and return.
c. The higher the risk of an asset, the higher the expected return on the asset.
d. The return on an asset is normally positively related to the risk of comparable assets.
e. The return on a risky asset cannot be compared with the return on a risk free asset.

Question 2

Suppose the prices of goods X, Y, and Z are 4, 1, and 5, respectively, and the last unit purchased of good X has a marginal utility MUx = 16 utils. At the point of equilibrium, the marginal utility of the last unit purchased of goods Y and Z will be:
a. MUy = 16 utils and MUz = 16 utils, respectively.
b. MUy = 8 utils and MUz = 2 utils, respectively.
c. MUy = 4 utils and MUz = 20 utils, respectively.
d. MUy = 2 utils and MUz = 4 utils, respectively.
e. MUy = 12 utils and MUz = 20 utils, respectively.