Use Figure 15

question 63

Multiple Choice

Use Figure 15.1 to answer the following questions.
-In the utility functions in Figure 15.1,curve b exhibits:

• A)diminishing marginal utility.
• B)economies of scale.
• C)risk seeking.
• D)satiation.
• E)unrealistic behavior.

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Definitions:

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Reinvestment Rate Risk

Reinvestment Rate Risk is the risk that the returns from reinvesting cash flows will be lower than initially anticipated due to changes in interest rates.

Annual Interest Payment

The total amount of interest paid on a bond or loan over the course of a year.

Coupon Rate

The percent of the face value paid as interest on a bond every year.