Which of the Following Three Statements Is True: I) the Amount

question 22

Multiple Choice

Which of the following three statements is true: I) The amount of capital equipment a firm wishes to buy depends on the rate of interest; II) The amount of capital equipment a firm wishes to buy depends on the purchase price of capital; III) The amount of capital equipment a firm wishes to buy depends on the rates of technological and physical depreciation.

• A)I
• B)II
• C)I and II
• D)All three statements are true.

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Definitions:

EAR

Effective Annual Rate, the actual return on an investment when compounding interest is taken into account over a one-year period.

Geometric Mean Return

The geometric mean return, for investment performance, is the compound annual growth rate (CAGR) of an investment, calculated by taking the nth root of the total returns, where n represents the number of periods.

Treasury Bonds

U.S. government debt securities with a maturity of more than ten years, offering fixed interest payments.

Holding-period Return

The cumulative return gained from owning an asset or collection of assets over a specific timeframe, usually represented as a percentage.