If the Simple Return on a Treasury Bill Is 8

question 60

Multiple Choice

If the simple return on a Treasury bill is 8.5 percent,the risk-free rate in the Black-Scholes-Merton model is

• A)8.77 percent
• B)8.93 percent
• C)8.55 percent
• D)8.20 percent
• E)none of the above

---

Definitions:

Consumer Surplus

The offset between the potential total payment by consumers for a good or service and the actual amount remitted.

Tax Revenue

The fiscal earnings that are accumulated by governments through taxation.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, representing profit or gains from trade.

Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures.