If the Spot Rate for Marsian Spotlets (MRS)is 4 Per

question 37

Multiple Choice

If the spot rate for Marsian Spotlets (MRS) is 4 per U.S.Dollar (USD) and the one-year risk-free rate of return is 30%,for the Marsian economy,then what should the risk free rate for the U.S.economy if the 1-year forward rate be for MRS/USD is 5?

• A) .04
• B) .038
• C) .625
• D) none of the above

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Definitions:

Marginal Revenue

The increase in total revenue that results from selling one additional unit of a product.

Average Revenue

The revenue generated per unit of output sold, calculated by dividing total revenue by the quantity of outputs sold.

Total Revenue

The overall amount of money earned by a business for its products or services before any costs or expenses are subtracted.

Marginal Cost

The increase in total cost that arises from producing an additional unit of output, crucial for decision-making in production.