If the risk-free rate of interest (r_f)is 5%, then you should be indifferent between receiving $300 today or A)$315.00 in one year. B)$350.00 in one year. C)$285.00 in one year. D)none of the above.

Question

Quizplus · Accepted Answer

The correct answer is A) $315.00 in one year. This is because with a 5% risk-free rate of interest, $300 today would grow to $300 * (1 + 0.05) = $315 in one year, making you indifferent between receiving $300 today or $315 in one year.

If the Risk-Free Rate of Interest (Rf)is 5%, Then You

If the Risk-Free Rate of Interest (R_f)is 5%, Then You