A Rational Decision Is One That

question 271

Multiple Choice

A rational decision is one that

• A)satisfies all desires.
• B)avoids the intentional allocation of resources.
• C)assigns available resources in the manner most preferred by decision makers.
• D)assigns available resources to the uses with the lowest opportunity costs.

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Definitions:

Uncovered Interest Rate Parity

A condition in which the difference in interest rates between two countries equals the expected change in exchange rates between their currencies, without hedging.

Spot Rate

The current price in the marketplace at which a given asset, such as a currency, commodity, or security, can be bought or sold for immediate delivery.

Nominal Risk-free Return

The return on an investment without adjusting for inflation, representing the interest rate on a risk-free security.

Initial Cost

The expenditure incurred at the beginning of a project or investment, including capital investment and operational expenses when applicable.