Based on the Rule of 72, What Interest Rate Do

question 6

Multiple Choice

Based on the Rule of 72, what interest rate do you need to earn to double your money in 6 years?

• A) 8%
• B) 12%
• C) 7%
• D) 6%

Interpret and calculate optimal consumption bundles based on marginal utility per dollar spent.

Examine the impact of price changes on consumer preferences and consumption patterns.

Understand the reasons behind the diamond-water paradox and the distinction between total utility and marginal utility.

Evaluate personal valuations and market prices in gift-giving and their effects on recipient utility.

---

Definitions:

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series relative to its mean, often used to compare the degree of variation from one data series to another.

Index Fund

An index fund is an investment fund designed to follow the performance of a specific market index, offering a broad market exposure with low operating costs.

Portfolio Expected Return

The weighted average of the expected returns on the assets contained within a portfolio.

Portfolio Risk

Portfolio Risk refers to the potential for loss in an investment portfolio, arising from the variability of returns from the various assets held within the portfolio.