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<p style="text-align:justify;"><span>(<strong>a) Risk-free Rate of Interest,</strong></span></p> <p style="text-align:justify;"><strong><span>(b) Maximum Rate of Return,</span></strong></p> <p style="text-align:justify;"><strong><span>(c) Rate of Interest on Fixed Deposits,</span></strong></p> <p style="text-align:justify;"><span><strong>(d) None of the above.. </strong></span></p>
(a)
A. Risk Free Rate.
I'd like to add this is only for governments issuing securities in their own currency. The rule is that Governments do not default on their own currencies.
A higher interest rate on local currency is usually an indication of expected currency devaluation by investors who lend the Government.
However, if we take Governments borrowing Foreign Currencies, this is no longer the risk free rate, as the risk of default does exist.
a) Risk-free Rate of Interest,
option A) Risk free rate of return.
A .Of Course, Risk Free rate of interest
Regards,
Joshi Mathew
CIA #1036906
Answer A correct answer
