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:

Schemata Representations

The mental structures that individuals use to organize and understand information.

Stimulants

Substances that increase alertness, attention, and energy by elevating the levels of certain chemicals in the brain.

Maze Learning

A method used in cognitive psychology and animal behavior studies to assess spatial learning and memory.

McGaugh's Studies

Research conducted by James McGaugh focusing on the role of emotions and the amygdala in memory formation.