The Expected Rate of Return from an Investment Is

question 174

Multiple Choice

The expected rate of return from an investment is

• A) the rate that compensates for time preference only.
• B) the rate that compensates for risk only.
• C) the rate that compensates for time preference plus the rate that compensates for risk.
• D) the rate that compensates for time preference minus the rate that compensates for risk.

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Definitions:

Perfectly Elastic

Describes a situation in economics where the quantity demanded or supplied responds infinitely to changes in price.

Down-sloping

A characteristic of certain economic graphs, like demand curves, which indicates that as the price of an item goes down, demand for it increases.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various price levels, holding all other factors constant.

Supply Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply at those prices.