The Risk-Free Rate of Interest

question 58

Multiple Choice

The risk-free rate of interest:

• A) is independent of market rates of returns on short-term securities.
• B) can be thought of as a real rate of interest on a short-term riskless government security.
• C) is influenced by the treasury bill's beta.
• D) is calculated by multiplying the market rate of risk by beta.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; a low standard deviation indicates that the values are close to the mean of the set.

Exam Grades

Scores or marks received by students on academic tests, indicating their performance level.

Probability

An assessment of the probability that a certain event will happen.

Function

A relationship or rule that defines how one variable's values are determined by another variable or other variables.