Asked by
jasmin henderson
on Dec 04, 2024
Verified
The present value formula makes it apparent that:
A) a decline in the interest rate will cause a decision maker to weigh recent period returns relatively more heavily than before the decline.
B) an increase in the interest rate will cause a decision maker to weigh distant (or future) returns relatively more heavily than before the increase.
C) the present value of a fixed sum decreases as the time until it is to be paid increases.
D) all of the above
E) both A and C.
Decline
A decrease in quantity, quality, or strength over a period, often observed in economic indicators, stock prices, or physical capacities.
Interest Rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
Present Value
The current worth of a future sum of money or stream of cash flows, given a specified rate of return.
- Analyze the effects of interest rate changes on the present and future value of financial instruments.
Verified Answer
LA
Learning Objectives
- Analyze the effects of interest rate changes on the present and future value of financial instruments.