Answer the following statements true (T) or false (F)
1) An asset's price and rate of return are directly related.
2) Arbitrage equalizes rates of return across assets of a given beta.
3) A portfolio of many different stocks and bonds protects against nondiversifiable risk.
4) The beta of an investment measures the probability-weighted expected rate of return of a
portfolio.
1) F
2) T
3) F
4) F
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If the interest rate were to rise, we expect that
A) autonomous expenditures will rise. B) the supply of money will fall. C) the amount of money people want to hold will rise. D) the amount of money people want to hold will fall.
The imposition of an import quota shifts
a. the supply of currency right, so the exchange rate falls. b. the supply of currency left, so the exchange rate rises. c. the demand for currency right, so the exchange rate rises. d. the demand for currency left, so the exchange rate falls.