Economics - Risk and Return MCQ Test 1

1. Define 'Systemic Risk' in the context of financial markets.

2. What characterizes 'Pigovian Taxes' in environmental economics?

3. What is the primary focus of 'Asset Allocation' in investment strategy?

4. In finance, what does 'Diversifiable Risk' refer to?

5. What is the primary focus of 'Fundamental Analysis' in stock valuation?

6. What does the 'Fama-French Three-Factor Model' add to traditional asset pricing models?

7. Define 'Dollar Cost Averaging' in investment strategy.

8. How does 'Standard Deviation' function as a measure of risk in financial analysis?

9. Define 'Quantitative Easing' in monetary policy.

10. What role does 'Moral Hazard' play in the financial industry?

11. In finance, what is 'Leverage'?

12. What is the primary focus of 'Real Options Valuation' in investment analysis?

13. Define 'Liquidity Risk' in the context of investments.

14. What does the 'Sharpe Ratio' assess in the context of investment performance?

15. What does the 'Hedonic Pricing Model' aim to analyze in economics?

16. What does 'ROI' stand for in financial terms?

17. What does the 'Risk-Return Tradeoff' suggest in finance?

18. How is 'Risk' typically defined in the context of financial investments?

19. In economic theory, what does 'Veblen Goods' refer to?

20. What does 'Yield Curve Inversion' indicate about the economy?

21. Explain the concept of 'Gini Coefficient' in measuring economic inequality.

22. What is the 'Time Value of Money' principle in finance?

23. Define 'Systematic Risk' in the realm of financial markets.

24. Define 'Sharpe Ratio' and its role in evaluating investment performance.

25. What does the 'Lucas Critique' address in economic policy?

26. What is the 'Phillips Curve' in macroeconomics?

27. Define 'Stagflation' in the context of economic conditions.

28. In finance, what does the 'Modigliani-Miller Theorem' state regarding capital structure?

29. What is the 'Black-Scholes Model' used for in options pricing?

30. Define 'Hedonic Pricing' in the context of economic analysis.

31. What is the significance of 'VaR' (Value at Risk) in risk management?

32. What does 'Stress Testing' aim to evaluate in the context of financial institutions?

33. Define 'Bull Market' in the context of financial markets.

34. What is 'Market Capitalization' in the context of stocks?

35. Explain the concept of 'Laffer Curve' in the context of taxation.

36. In international trade, what does 'Comparative Advantage' refer to?

37. What is the 'Capital Asset Pricing Model (CAPM)' used for in finance?

38. What does 'Deflation' refer to in the context of economics?

39. What does the 'Efficient Market Hypothesis (EMH)' propose?

40. What is the 'Tobin's Q Ratio' used for in finance?

41. What is the primary goal of 'Monetary Policy'?

42. Define 'Arbitrage' in the context of finance.

43. Define 'Quantitative Easing' as a monetary policy tool.

44. What is the primary role of the 'Federal Reserve' in the United States?

45. In finance, what does the term 'Liquidity' refer to?

46. What does the 'Pareto Principle' suggest in economic decision-making?

47. What is the significance of the 'Dividend Yield' in stock investing?

48. What does the 'Gini Coefficient' measure in the context of income distribution?

49. What is the primary purpose of 'Beta' in investment analysis?

50. Define 'Systematic Risk' in the context of investments.