- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 44. Economics and Investment Markets
- Subject 2. Default-Free Interest Rates and Economic Growth

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**CFA Practice Question**

Consider the following statements.

II. A real risk-free interest rate will result in more volatility in real GDP growth.

I. A real risk-free interest rate will result in real growth in GDP.

II. A real risk-free interest rate will result in more volatility in real GDP growth.

A. Only statement I is true.

B. Only statement I is true.

C. Neither statement is true.

**Explanation:**Statement I is false. The opposite is true; an increase in real GDP growth will result in a higher real risk-free interest rate.

Statement I is also false. The opposite is true; an increase in the volatility of real GDP growth will result in a higher risk-free interest rate.

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**User Contributed Comments**
1

User |
Comment |
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JNW1980 |
Think something funny is going on here... |