The Present Value Formula Makes It Apparent That

question 18

Multiple Choice

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.

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Definitions:

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