You Have Won a Contest and Are Allowed to Choose

question 60

Multiple Choice

You have won a contest and are allowed to choose between two prizes. One option is to receive $200 today and another $200 one year from now. The second option is $100 today and an additional $325 one year from now. At what interest rate (if any) is the present value of the two prizes identical?

• A) 0 percent
• B) 5 percent
• C) 10 percent
• D) 25 percent
• E) none of the above

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Definitions:

Red Flag Words

Words that bring an immediate emotional response (usually negative) from the listener, generally because of strong beliefs on the subject.

Implied Meanings

The underlying or suggested meaning conveyed by a message, which might not be explicitly stated but understood through context or nonverbal cues.

Information Overload

The type of listening that happens when a listener is overwhelmed with incoming information and has to decide which information will be processed and remembered; this is a common cause of poor listening skills.

Selective Listening

The type of listening that happens when a listener deliberately chooses what he or she wants to pay attention to.