Your Friend Wants to Borrow $2,000, Pay It Back in 1

question 132

Multiple Choice

Your friend wants to borrow $2,000, pay it back in 1 year, and is someone who keeps his or her word.The friend agrees to repay you $2,080 in 1 year.The bank interest rate is 5 percent.Which of the following statements is(are) true?

• A) You will be financially worse off if you make the loan rather than deposit $2,000 in the bank.
• B) You will be financially better off if you make the loan rather than deposit $2,000 in the bank.
• C) The present value of $2,080 payable in one year with an interest rate of 5 percent is $1,904.76, which is less than the value of the $2,000 you have been asked to loan.
• D) A and C are true.

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Definitions:

Transference

In psychotherapy, the process by which emotions originally associated with a significant person in an individual's life are unconsciously transferred to the therapist.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology.

Resistance

The act of opposing or standing against something, which can refer to physical opposition, disease immunity, or refusal to accept social norms.

Unconscious Conflicts

Internal struggles, often stemming from childhood, that reside outside of conscious awareness but influence behavior and emotions.