The risk-free rate is the interest rate:
A. borrowers get when the loan is extremely short term.
B. at which one would lend if there were no risk of default.
C. the government charges for the loans it gives out.
D. savers get on their deposits.
Answer: B
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The key to diversification is that the risks should be:
A. positively correlated. B. uncorrelated. C. negatively correlated. D. easy to reduce.
When compared to a sole proprietorship, a disadvantage of the partnership form of business organization is that there
a. is reduced access to capital resources b. is limited liability c. is shared liability with each partner for all the firm's debts d. can only be two partners e. are fewer opportunities to expand output
The opportunity cost of an action is
a. the monetary payment the action required. b. the total time spent by all parties in carrying out the action. c. the value of the best opportunity that must be sacrificed in order to take the action. d. the cost of all alternative actions that could have been taken, added together.
During the time period represented in Figure 7.3, the purchasing power of the average worker
A. Decreased because nominal income decreased. B. Stay the same because COLAs reduced purchasing power. C. Decreased because real income decreased. D. Increased because nominal wages increased.