Growth rates of the (1) labor force, (2) average number of hours worked, and (3) labor productivity are the main determinants of a foreign country's
A) dividend payout ratio.
B) beta.
C) real risk free rate.
D) nominal risk free rate.
E) risk premium.

Question

Quizplus · Accepted Answer

The growth rates of the labor force, average number of hours worked, and labor productivity are key factors that determine a foreign country's real economic growth rate. This, in turn, affects the real risk-free rate, which is the basis for determining a country's nominal risk-free rate and ultimately its risk premium. Therefore, the correct answer is C, real risk-free rate.

Growth Rates of the (1) Labor Force, (2) Average Number