The Expected Value of a Future Payment Differs from the Present

question 57

Multiple Choice

The expected value of a future payment differs from the present discounted value in that the expected value

• A)Takes into account the possibility of nonpayment.
• B)Uses a lower interest rate in its calculation.
• C)Uses a higher interest rate in its calculation.

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Definitions:

Likelihood

The probability or chance of an event occurring, often assessed in decision-making processes.

Behavioral Consequences

The outcomes or results that follow from specific behaviors, which can reinforce or discourage the behavior.

Desired Behavior

Actions or conduct that are sought after or encouraged within a certain context, such as a workplace or community.

Reinforcement Schedule

A strategy in behavior analysis that determines how and when a behavior will be reinforced to encourage or discourage it.