29. In economic theory, a “hurdle rate" is the minimum return that a person requires before he or she will make an investment. A research report says that annual re- turns from a specific class of common equities are distributed according to a normal distribution with a mean of 12% and a standard deviation of 18%. A stock screener would like to identify a hurdle rate such that only 1 in 20 equities is above that value. Where should the hurdle rate be set?

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curv…