What Annual Rate of Return Is Implied on a $1,000

question 133

Multiple Choice

What annual rate of return is implied on a $1,000 loan taken next year when $1,500 must be repaid in year 5?

• A) 8.45 percent
• B) 10.00 percent
• C) 10.67 percent
• D) 12.50 percent

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Definitions:

Indifference Curves

Graphical representations in economics showing different combinations of two goods that give a consumer equal satisfaction and utility, thus marking consumer preferences.

Concave

A shape or curve that is curved inward, resembling the interior of a circle or sphere, often used to describe functions or geometric objects.

Convex

A shape or curve that curves outward or bulges outward, typically used in the context of geometric figures or in economic models to describe preferences or production possibilities.

Budget Lines

A visual depiction showing every possible pair of two products that can be bought within a specific budget at constant prices.