Everyone uses money and it is important to understand what

Last updated: 6/11/2023

Everyone uses money and it is important to understand what factors affect the cost of money Consider the following scenario A friend comes to you and asks you to invest in his business instead of investing in Treasury bonds You think he has a good business model so you tell him you are willing to invest as long as the expected return on the investment is at least four times the return you would have received on the Treasury bonds Determine which of these fundamental factors is affecting the cost of money in the scenario described Time preferences for consumption Inflation Risk