Why Is the Rate of Return on a Risk Free

question 67

Multiple Choice

Why is the rate of return on a risk free asset considered to represent the "time value of money"?

• A) It represents the return for forgoing the use of our money without bearing risk.
• B) It has an efficient risk premium when compared to other risk free investments.
• C) The yield of the risk free investment increases proportionally with time.
• D) The money from the return from your investment won't be created until the future.
• E) It represents the minimum amount of time necessary to have the asset become risk free.

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Definitions:

Control Chart

A graph used to study how a process changes over time, showing plotted values of some statistical measure against time to identify outliers or trends.

Production Process

The sequence of operations or steps taken to convert raw materials into finished goods or services.

Fixed Sample Size

A specific number of observations or data points that are predetermined before conducting an experiment or study.

Data

Information collected in numerical form for analysis or used to make decisions, often gathered from observations, experiments, or surveys.