Question
This economist and his student Richard Brumberg outlined a “hump-shaped” pattern of wealth accumulation that peaks in the middle of adulthood, called the “life-cycle hypothesis.” For 10 points each:
[10m] Name this economist who co-names a theorem often called “capital structure irrelevance.” That theorem, co-named for this economist and an American-born colleague, posits that how a firm is structured should not affect its value.
ANSWER: Franco Modigliani [prompt on Modigliani–Miller theorem]
[10e] The Modigliani–Miller theorem implies that equity rises with a ratio named for equity and this quantity. This quantity is the amount owed by one party to a creditor.
ANSWER: debt [or national debt]
[10h] The Modigliani risk-adjusted performance, which measures the risk-adjusted returns of some portfolios, is derived from this measurement. This measurement is the slope of a capital allocation line.
ANSWER: Sharpe ratio [or Sharpe index; or reward-to-variability ratio]
<NS, Social Science>
Summary
| California | 2025-02-01 | Y | 1 | 20.00 | 100% | 100% | 0% |
| Lower Mid-Atlantic | 2025-02-01 | Y | 1 | 10.00 | 100% | 0% | 0% |
| Midwest | 2025-02-01 | Y | 1 | 10.00 | 100% | 0% | 0% |
| Overflow | 2025-02-01 | Y | 1 | 10.00 | 100% | 0% | 0% |
| Southeast | 2025-02-01 | Y | 1 | 20.00 | 100% | 100% | 0% |
| UK | 2025-02-01 | Y | 1 | 10.00 | 100% | 0% | 0% |