How does the fact that asset prices and expected rates of return are inversely related cause asset risk and expected rates of return to be positively related?
What will be an ideal response?
Asset prices and expected rates of return are inversely related because the higher the price of an asset, the less return an investor is likely to earn on that investment. This relationship causes asset risk and expected return to be positively related because the riskier an asset is, the lower its price will be. Following the relationship of prices and expected rates of return, the lower the price, the higher the rate of return. Thus, high risk results in high expected return and vice versa.
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When a domestic country exports goods to and imports goods from a foreign country, in the short run domestic:
A) producers in the exporting industry may be better off. B) consumers of the imported good may be worse off. C) consumers of the exported good may be better off. D) producers in the importing industry are better off.
The Group of Seven is an informal international institution that is comprised primarily of the:
A. major developing countries. B. leading industrial democracies. C. leading petroleum exporting countries. D. leading socialist countries.