When Real Rates of Interest Are Positive, It Is Better

question 159

Multiple Choice

When real rates of interest are positive, it is better to be a:

• A) saver than a borrower, because the value of savings and debts are increasing.
• B) borrower than a saver, because the value of savings and debts are increasing.
• C) saver than a borrower, because the value of savings and debts are decreasing.
• D) borrower than a saver, because the value of savings and debts are decreasing.

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Definitions:

Weights

In finance, refers to the proportion of each asset within a portfolio or a composite measurement, indicating its relative importance or contribution to the overall performance.

Return

The profit or loss generated on an investment over a certain period, usually expressed as a percentage of the initial investment.

Portfolio Theory

A framework for building an investment portfolio that aims to maximize returns by taking a specified amount of market risk.

Markowitz

Refers to Harry Markowitz, an economist known for his pioneering work in modern portfolio theory and investment diversification.