COMM 220 Chapter 5: COMM 220 CHAPTER 5 MISHKIN.docx
22 Oct 2014
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In the section, we will discover what determines the quantity demanded of an asset. So when you decide if you want to buy and hold an asset or whether to buy one asset rather than another, then you must consider the following factors: wealth, expected return, risk, and liquidity. : the total resources owned by the individual, including all assets. When our wealth increases, we have more resources available with which to purchase. A. assets, so holding everything else constant, an increase in wealth raises the quantity demanded of an asset. B. assets everything else unchanged, raises the quantity demanded of the asset. An increase in an asset"s expected return relative to that of an alternative asset, holding. : return expected over the next period on one asset relative to alternative. : the degree of uncertainty associated with the return on one asset relative to.
