For firms that carry relatively little risk, how does the normal rate of profit compare with the interest rate on risk-free government bonds?

Correct answer A. Approximately equal to

Explanation

Normal profit is the opportunity cost of the owner's capital. For an almost risk-free firm, the best alternative is a risk-free bond, so the normal return is roughly equal to the bond rate.

Report a problem

Answer checked How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

Advertisement

Have a question about this answer?

Your email address will not be published. Required fields are marked *

Links and website addresses are not allowed in comments.