Jack Has $1,000 That He Wishes to Invest for the Next

question 48

Essay

Jack has $1,000 that he wishes to invest for the next two years.One-year CDs are currently paying 8 percent while two-year CDs are paying 12 percent.Economists are predicting that interest rates will rise by the end of the year.What is the minimum amount interest rates would have to increase to make the one-year CD better than the two-year?
(a)16 percent
(b)14 percent
(c)12 percent
(d)10 percent

Understand the roles of households and businesses in the market system.

Comprehend how a market system manages business risks.

Grasp the concepts of risk management, including the purpose of insurance.

Differentiate between market and command economies in terms of risk management and economic performance.

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Definitions:

Cash Surrender Value

The amount of money an insurance policyholder can receive if they choose to terminate a policy before its maturity date.

Cash Surrender Value

Cash surrender value is the amount an insurance policyholder can receive if they decide to terminate the policy before its maturity or the insured event occurs.

Equity Funds

Mutual funds that primarily invest in company stocks, representing ownership in those companies.

Secured Loan

A loan that requires collateral as security for the lender.