Why does diversification fail to reduce risk when the returns of the two investments purchased are perfectly positively correlated?
What will be an ideal response?
If two returns are perfectly positively correlated, then what happens to one in terms of rising or falling will happen to the other.
Economics
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In the above figure, if this natural monopoly is not regulated the deadweight loss to society is
A) ecf. B) ebc. C) gac. D) gde.
Economics
Using Taylor's rule, when the equilibrium real federal funds rate is 2 percent, there is no output gap, the actual inflation rate is zero, and the target inflation rate is 2 percent, the nominal federal funds rate should be
A) 0 percent. B) 1 percent. C) 2 percent. D) 3 percent.
Economics