If People Follow the Rule of Rational Choice, on What

question 15

Multiple Choice

If people follow the rule of rational choice, on what basis will they make their decisions?

• A) earning the most money
• B) yielding the largest net gain
• C) equating the total benefit of those options to their total cost
• D) promoting the common good

---

Definitions:

Zero-coupon Bonds

Bonds that do not pay periodic interest payments and are instead issued at a deep discount to their face value, maturing at par.

Treasury Bill

A Treasury Bill (T-Bill) is a short-term government debt obligation backed by the Treasury Department with a maturity of one year or less.

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a certificate or instrument.

Effective Annual Yield

The return on an investment expressed as an annual rate, taking into account the effect of compounding interest.