Use the Following Information to Answer the Question(s)below

question 48

Multiple Choice

Use the following information to answer the question(s) below:
Suppose the term structure of risk-free interest rates is given as:
Term 1 year 2 years 3 years 5 years 10 years
Rate 2.25% 2.80% 3.20% 4.10% 6.30%
-The present value of an investment that pays $2000 in one year and $3000 in three years for certain is closest to:

• A)$4707.
• B)$4685.
• C)$4729.
• D)$5000.

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Definitions:

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of product or service.

Demand Curve

A graph depicting the relationship between the price of a good or service and the quantity demanded for a given period, typically showing a downward slope from left to right.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, with elasticity indicating responsiveness.

Demand Curve

A graph depicting the relationship between the price of a good and the quantity demanded by consumers, typically showing an inverse relationship.