The Reason That a Discount Factor in Year 3 Is

question 83

Multiple Choice

The reason that a discount factor in year 3 is less than a discount factor in year 2 is that

• A)cash flows are uneven.
• B)compounding does not occur.
• C)cash flows are even.
• D)present value is positive.
• E)a dollar received in three years is worth less than a dollar received in two years.

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Definitions:

Opposite Direction

A term indicating a movement, action, or trend that goes in the reverse direction of a previously established pattern or expectation.

Correlation

A measure that represents the extent to which two variables change together, but it does not necessarily imply causation.

Validity

The extent to which a test, measure, or research accurately reflects or assesses the specific concept it is intended to.

Reliability

The degree to which an assessment tool or measurement can produce stable and consistent results over time.