Market Interest Rates Have Risen Substantially in the Five Years

question 32

Multiple Choice

Market interest rates have risen substantially in the five years since an investor purchased Treasury bonds that were offering a 7 percent return.If the investor sells now she is likely to receive:

• A)greater than a 7 percent total return.
• B)less than a 7 percent total return.
• C)a 7 percent total rate of return.
• D)a 7 percent nominal return but less than a 7 percent real return.

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Definitions:

Public Good

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded.

Marginal Benefit

The incremental utility or satisfaction derived from the consumption or production of an additional good or service unit.

Marginal Cost

The increment in comprehensive expenses related to the generation of an extra unit of a good or service.

Total Benefit

The entire satisfaction or value derived from consuming a good or service.