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For Complete Certainty in Relation to the Risk Free Rate

Question 47

Multiple Choice

For complete certainty in relation to the risk free rate, which two of the following conditions are needed?


A) The risk of default must be zero.
B) Investors shall become gradually less risk averse over time.
C) When intermediate cash flows are earned on a multi- year investment there is no uncertainty about reinvestment rates.
D) Future required rates of interest must be covariant with the bank rate.

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