Consider the Following Investment Alternatives: the Lowest Effective Rate

question 92

Multiple Choice

Consider the following investment alternatives: The lowest effective rate of return you could earn on any of these investments is closest to ________.

• A)6.3830%
• B)6.4080%
• C)6.4330%
• D)6.4580%

---

Definitions:

Return

The gain or loss on an investment over a specific period, usually expressed as a percentage of the investment's initial cost.

Total Risk

The complete range of risks associated with an investment, including both systemic and unsystematic risk.

Modigliani

Refers to Franco Modigliani, an Italian-American economist known for his work on corporate finance, the Modigliani-Miller theorem, and the life-cycle hypothesis of saving.

Developed

Pertains to countries that have a high level of industrialization, a high standard of living, and a well-established economic structure.