If You Expect the Inflation Premium to Be 2%, the Default

question 24

Multiple Choice

If you expect the inflation premium to be 2%, the default risk premium to be 1% and the real interest rate to be 4%, what interest would you expect to observe in the marketplace on short term treasury securities?

• A) 8%
• B) 7%
• C) 6%
• D) 5%

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Definitions:

SaaS

Short for Software as a Service, it is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over the internet.

B2C

Business-to-Consumer, a sales model in which businesses sell products or services directly to the final consumer.

Partnership

A cooperative relationship between two or more parties, often businesses, where each party contributes to and benefits from joint activities.

Competitors

companies or entities that operate in the same industry and vie for the same customer base, offering similar products or services.