问一道题：NO.PZ201704060100000203

问题如下：

In response to Perrin’s Concern #1, human capital will most likely:

选项：

decrease.

remain the same.

increase.

解释：

C is correct.

Human capital, HC₀, is calculated as follows:

$HC_0=\sum_{t=1}^N\frac{p(s_t)w_{t-1}(1+g_t)}{{(1+r_t+y)}^t}$

Holding all else equal as Perrin directs, a reduction in the nominal risk-free rate, r_f, would decrease the total discount rate, thus increasing the present value of human capital.