Idiosyncratic risk is the ?

A. Uncertainty associated with the entire economy
B. Uncertainty associated with specific companies
C. Risk associated with adverse selection
D. Risk associated with moral hazard

Compared to a portfolio composed entirely of shares a portfolio that is 50 percent government bonds and 50 percent shares will have a ?

A. Lower return and a lower level or risk
B. Lower return and a higher level of risk
C. Higher return and a lower level or risk
D. Higher return and a higher level of risk

If the efficient markets hypothesis is true, then ?

A. Shares tend to be overvalued
B. The stock market is informationally efficient so share prices should follow a random walk
C. All of these answers
D. Fundamental analysis is a valuable tool for increasing one’s returns from investing in shares

If two countries start with the same real GDP/person and one country grows at 2 percent while the other grows at 4 percent ?

A. One country will always have 2 percent more real gdp/person than the other
B. The standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth
C. The standard of living in the two countries will converge
D. Next year the country growing at 4 percent will have twice the gdp/person as the country growing at 2 percent

JCB (Which makes agricultural and construction equipment) has the opportunity to purchase a new factory today that will provide them with a Rs50 million return four years from now If prevailing interest rates are 6 percent, what is the maximum that the project can cost for JCB to be willing to undertake the project ?

A. Rs 43,456,838
B. Rs 53,406,002
C. Rs 34,538,902
D. Rs 39,604,682

People are said to have rational expectations if they ?

A. Assume that this year’s inflation rate will be the same as last year’s inflation rate
B. Merely guess at the inflation rate.
C. Assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years
D. Use all available information in forming their expectations.

The quantity theory of money implies that a given percentage change in the money supply will cause ?

A. An equal percentage change in nominal dgp.
B. An equal percentage change in real gdp
C. A larger percentage change in nominal gdp
D. A smaller percentage change in nominal

It is difficult to determine if the velocity of money is constant over time because ?

A. It is difficult to measure the value of nominal gdp over time
B. There has been very little fluctuation in the money supply over time.
C. It is difficult to measure the demand for money over time
D. Whether velocity is constant or not may depend on how the money supply is measure.

The regarding the new classical macroeconomics is hoe realistic is the assumption ?

A. That monetary policy affects aggregates demand
B. That markets do not clear quickly
C. That fiscal policy affects aggregate demand
D. Of rational expectations.

The amount today that would be needed, at prevailing interest rates, to produce a particular sum in the future is known as ?

A. Future value
B. Fair value
C. Present value
D. Compound value