The Rule of 70 States That the Level of a Variable

question 8

Multiple Choice

The Rule of 70 states that the level of a variable will double in

• A)70 years.
• B)the number of years equal to the variable's annual rate of growth divided by 70.
• C)the number of years equal to 70 divided by the variable's annual growth rate.
• D)the number of years equal to the variable's annual growth rate minus 70.
• E)the number of years equal to 70 multiplied by the variable's annual growth rate expressed as a decimal.

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Definitions:

Quoted Price

The current price at which an asset or service can be bought or sold, often provided in financial markets or by vendors.

Natural Hedge

A transaction between two counterparties where both parties’ risks are reduced.

Derivatives Transaction

A financial agreement whose value is based on, or derived from, the value of an underlying asset or group of assets.

Arbitrage Profits

Profits generated from exploiting price differences of the same asset in different markets, buying low in one and selling high in another.