Suppose a Security with a Risk-Free Cash Flow of $1000

question 80

Multiple Choice

Suppose a security with a risk-free cash flow of $1000 in one year trades for $909 today.If there are no arbitrage opportunities,then the current risk-free interest rate is closest to:

• A)8%
• B)10%
• C)11%
• D)12%

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Definitions:

Personality

An individual’s characteristic pattern of thinking, feeling, and acting.

Genes

The biochemical units of heredity that make up the chromosomes; a segment of DNA capable of synthesizing a protein.

Evolutionary Perspective

An approach in psychology that emphasizes the role of natural selection and adaptation in the development of behavior and mental processes.

Cognitive Perspective

A psychological approach that focuses on how people perceive, think about, and mentally organize information about the world around them.