If You Had Owned a Ten-Year Treasury Bond from 2000

question 11

Multiple Choice

If you had owned a ten-year Treasury bond from 2000 to 2009, what would have been your real rate of return?

• A)0)1%
• B)0)9%
• C)1)9%
• D)2)6%
• E)6)2%

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Initial Cost

The upfront expenditure involved in the purchase of an asset or the start of a project.

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or assets.