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Pure Rate of Interest
The rate of return on a risk-free investment, theoretically excluding the effects of inflation, default risk, and other factors.
Residual Claimants
Individuals or entities entitled to a share of an organization’s income only after all other claims, such as debts and taxes, have been satisfied.
Interest Rate
The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender.
MB = MC Rule
A principle in economics that states the optimal level of an activity is reached when the marginal benefit (MB) is equal to the marginal cost (MC).
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