You Borrow $10,000 at an Interest Rate of 5% to Open

question 144

Multiple Choice

You borrow $10,000 at an interest rate of 5% to open a snow cone stand.You will earn an economic profit if

• A)the return on your investment is 5%.
• B)the return on your investment is greater than 5%.
• C)the return on your investment is between 0 and 5%.
• D)the return on your investment is 10% or greater.

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Definitions:

Stock Volatilities

Stock volatilities measure the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns, indicating the investment's risk.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases.

Systematic Correlation

Refers to the relationship between the return of an investment and the return of the market as a whole, often used to assess investment risk.

Mineral Oil

A liquid by-product of refining crude oil, used as a base ingredient in some lubricants, cosmetics, and industrial chemicals.