Which of the Following Is True About the Case Against

question 23

Multiple Choice

Which of the following is true about the case against McDonald's for serving very hot coffee?

• A) The plaintiff was not allowed to recover because she assumed the risk of injury.
• B) McDonald's coffee was found to be the same temperature as that served by its competitors.
• C) McDonald's had turned down a pretrial offer of settlement which was much lower than the amount awarded by the jury.
• D) McDonald's paid the amount to the plaintiff that the jury awarded.
• E) The jury concluded that McDonald's committed an intentional wrong.

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Definitions:

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.

Inflation Premium

The additional interest rate that lenders demand to compensate for the loss of purchasing power of money due to inflation.

Yield Curve

The relationship between interest rates and the term of debt, generally expressed graphically. A normal yield curve is upsloping, reflecting rates that increase with increasing term. An inverted curve is downsloping.

Liquidity Premiums

Additional yield that investors require for holding securities with lower liquidity.