Vilfredo Is Considering Buying a House for $220,000 and Renting

question 103

Multiple Choice

Vilfredo is considering buying a house for $220,000 and renting it out for $2,000 per month. If the price suddenly jumps to $250,000, Vilfredo's expected yearly rate of return will

• A) remain unchanged, as the house price and the rate of return are independent of each other.
• B) be 13.6 percent.
• C) fall from 9 percent to 8 percent.
• D) fall from 10.9 percent to 9.6 percent.

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Definitions:

Culture Diversification

The process by which a culture becomes more varied and complex through the incorporation of different ethnic, social, or cultural influences.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale.

Culture

The collective set of customs, traditions, arts, social norms, and knowledge shared by a particular group of people.

Cooperation

The process of groups working jointly towards a common goal or interest.