Explain why the variance of an investment is a useful measure of the risk associated with it
What will be an ideal response?
The variance provides a measure of the spread of the probability distribution around the expected value of the investment. That is, if the variance is relatively small, the expected value is more likely to be the actual value. If the variance is relatively large, the expected value is less likely to be the actual value. Since something that is more uncertain is said to be more risky, and something with a higher variance is more uncertain, the variance measures risk.
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Price and total revenue move in opposite directions when demand is elastic
Indicate whether the statement is true or false
Marginal propensity to save is equal to the change in ____ divided by the change in ____
a. consumption spending; total income b. saving; total income c. saving; disposable income d. consumption spending; disposable income