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D076 Unit 3 exam questions and answers 2024.
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D076 Unit 3 exam questions and answers 2024.
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D076 Unit 3 examquestions and answers
2024
What is the term for the percentage of the
principal that a lender charges a borrower for the
use of assets? - answer Interest rate
How is the interest rate expressed? - answer as a
percentage
What is the main purpose of charging interest? -
answer It allows borrowers to pay to use the assets
of another entity to accomplish their own goals.
What is a component of the required rate of
return? - answer Opportunity cost
Why would a long-term investment require a
higher rate of return? - answer There is greater
risk involved and a higher opportunity cost.
, You just inherited $25,000 from a long-lost
relative. You decide to put the money in a savings
account for the time being. What would be
considered an opportunity cost of putting the
money in savings? - answer Buying a brand new
car
Today, he pulled out $15,000 from his account to
buy the car, but the price of the car is now
$16,562. Which component of the required rate of
return did Ahmed forget to consider? - answer
Inflation
Why is built-in inflation linked to adaptive
expectations? - answer Workers want higher wages
to keep their standard of living as prices increase,
which pushes the prices even higher.
What is the compensation for risk given to
investors called? - answer Risk Premium
Which type of interest rate is the rate at which
invested money grows for a certain period time? -
answer Nominal Rate
Which component of an interest rate is an indicator
of inflation and opportunity cost? - answer Risk
Free Rate
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