In the theory of portfolio choice, which of the following will decrease the quan
ID: 1130672 • Letter: I
Question
In the theory of portfolio choice, which of the following will decrease the quantity demanded of an asset? CA an increase in the risk of the asset relative to alternative assets B. an increase in the liquidity of the asset relative to alternative assets C. an increase in the wealth of the buyer O D. an increase in the expected return on the asset relative to alternative assets If a one-year discount bond that pays $1,000 at maturity, is held for the entire year, and the purchase price is $940, then the interest rate is %. (Round your response to the nearest percentage)Explanation / Answer
If there is more risk then there will be less demand for an asset.So option is A
Actual price=940
Maturity =1000
Total gain is 60 dollars.we can calculate interest rate as 60/940=6.38%..interest rate is 6.38%