The Shorter the Length of Time Between a Present Value

question 49

Multiple Choice

The shorter the length of time between a present value and its corresponding future value:

• A) the lower the present value,relative to the future value.
• B) the higher the present value,relative to the future value.
• C) the higher the interest rate used in the present-valuation.
• D) the lower the discount rate used.

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Definitions:

Consumer Price Index

A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Base Year

A specific year chosen as a point of reference or standard of comparison for financial or economic data.

American Family

A social unit in the United States consisting of individuals related by blood, marriage, or adoption, characterized by diverse structures and cultural practices.

Sustained Deflation

A prolonged period in which the level of consumer prices decreases, indicating a reduction in the inflation rate below zero percent.