Risk Premiums Do All of the Following Except

question 57

Multiple Choice

Risk premiums do all of the following except

• A)Help explain why banks charge different customers different interest rates.
• B)Allocate limited resources only to the safest investors.
• C)Are the difference in the rates of return on risky and safe investments.
• D)Compensate people who finance risky ventures.

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Definitions:

Bumper Crop

is an unusually large harvest of a crop, often due to favorable growing conditions.

Farm Incomes

The earnings obtained from agricultural activities after expenses are deducted.

Crop

A cultivated plant that is grown on a large scale commercially, especially a cereals, fruit, or vegetable.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a certain period of time.