Which of the following will tend to result in the least variation in the expected real rate of return from the ownership of stocks?
a. ownership of a single stock for a short period of time
b. ownership of a single stock over a lengthy period of time
c. ownership of stocks from a specific sector (for example, the automobile industry) over a lengthy period of time
d. ownership of a diverse set of stocks (the Standard & Poor's 500, for example) over a lengthy period of time
D
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An option buyer
A) has a greater insurance benefit than the purchaser of a futures contract. B) bears the risk of unfavorable price movements. C) is purchasing a naked option if he or she does not also own the underlying asset. D) generally will incur a lower cost than will the purchaser of a futures contract.
A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:
a. elastic. b. inelastic. c. of unitary elasticity. d. indeterminate; more information is needed to determine the price elasticity of demand.