What is financial economics? What are the most important investor preferences?
What will be an ideal response?
Financial economics explores investor preferences and the affect trading and pricing of assets are affected by the preference of investors. The two most important preferences held by investors is a wish for high rates of return and low levels of risk on investments.
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If a good has an external cost, then the marginal private cost curve
A) lies below the marginal social cost curve. B) lies above the marginal social cost curve. C) is negative. D) is the same as the marginal external cost curve.
The consumption function shows how ________
A) the marginal propensity to consume varies with disposable income B) income varies as a result of changes in consumption C) consumption depends on the decision to save D) all of the above E) none of the above