If the Rate of Interest That Investors Can Earn on a 2-Year

question 47

Multiple Choice

If the rate of interest that investors can earn on a 2-year investment is zero then

• A) you will repay the same amount of money at the conclusion of a loan that you borrowed at the beginning of the 2 year loan.
• B) the "cost" of using money for 2 years is zero.
• C) you will receive the same amount of money at maturity that you invested at the beginning of a 2 year investment.
• D) all of the above.

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Definitions:

Decision-making Process

A systematic sequence of steps or stages that one follows to come to a conclusion and make a choice among alternatives.

Expected Monetary Values

A financial analysis method used to anticipate the potential financial results by assessing the varied possible outcomes and the likelihood of each occurring, considering their impact on overall financial performance.

Expected Value

The anticipated value of a variable, computed as an average of all possible values weighted by their probabilities.

Expected Monetary Value

A calculation used in decision-making to determine the average outcome when the future includes scenarios that may or may not happen.