​A Buyer Values a House at $525,000 and a Seller

question 42

Multiple Choice

​A buyer values a house at $525,000 and a seller values the same house at $485,000.If sales tax is 8% and is levied on the buyer,then,what would be the highest price that the buyer would be willing to pay?

• A)​$525,000
• B)$523,800
• C)$485,000
• D)​$486,111

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Definitions:

Required Rate

The minimum return that investors demand for investing in a specific asset or undertaking a project.

Risk Premium

The additional return an investor expects to receive from an investment by taking on a higher level of risk.

Risk-Free Interest

Risk-free interest is the theoretical rate of return of an investment with zero risk, serving as a benchmark for evaluating the risk and return of other investments.

Negative Beta Stocks

These are stocks that tend to move inversely to the overall stock market; when the market rises, these stocks' prices may fall, and vice versa.