Economists Novy-Marx and Rauh Contend That to Accurately State Their

question 40

Multiple Choice

Economists Novy-Marx and Rauh contend that to accurately state their pension liabilities, state and local governments should use

• A)the interest rate on U.S. treasuries.
• B)the interest rate on what they hope to get on their stocks.
• C)the interest rate that they have to borrow at.
• D)an interest rate of 0%.

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Definitions:

Currency

Currency refers to the system of money in general use in a particular country, including both physical coins and banknotes, as well as digital or electronic forms.

Money Market Mutual Funds

Investment funds which gather capital from investors to buy short-term, low-risk securities such as Treasury bills and commercial paper.

M1

A category of the money supply that includes all physical money, such as coins and currency, as well as demand deposits, checking accounts, and negotiable order of withdrawal (NOW) accounts.

M2

A measure of the money supply that includes cash and checking deposits (M1) as well as near money, such as savings deposits, money market securities, and time deposits.