What's the Rate of Return You Would Earn If You

question 117

Multiple Choice

What's the rate of return you would earn if you paid $1,780 for a perpetuity that pays $85 per year?

• A) 5.92%
• B) 4.25%
• C) 4.92%
• D) 4.63%
• E) 4.78%

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Definitions:

Money Markets

Financial markets where short-term debt instruments, typically with maturities of one year or less, are traded.

Maturities

The dates on which the principal amounts of financial instruments or securities are due to be paid back.

Consumer Savers

Individuals or entities that prioritize saving over spending, often seeking to maximize their financial well-being and future security.

Financial System

An intricate network of financial institutions, markets, and instruments that facilitate the exchange of funds and allocation of resources in an economy.