The Proposition That the Price of a Resource Is Expected

question 59

Multiple Choice

The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the

• A) Hotelling Principle.
• B) diminishing marginal revenue product.
• C) derived demand for productive resources.
• D) Discounted Value Proposition.
• E) Interest Rate Theory.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if held until it matures.

Interest-Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates, affecting debt securities inversely with respect to their prices and yields.

Unsystematic Risk

The portion of total risk that is specific to a single investment or to a small group of investments, also known as idiosyncratic or specific risk, which can be mitigated through diversification.

Bankruptcy

A legal process in which individuals or businesses unable to meet their financial obligations seek relief from some or all of their debts.