If the Interest Rate Is 10%, the Current Market Value

question 17

Multiple Choice

If the interest rate is 10%, the current market value of $1 to be delivered in one year is

• A) $0.91.
• B) $0.99.
• C) $1.00.
• D) $1.10.

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Definitions:

Note Receivable

A written promise to pay a specified amount of money, usually with interest, at a future date; it is recorded as an asset on the balance sheet.

Due Date

The specific date by which a payment must be made or a task must be completed.

Promissory Note

A written promise to pay a specified sum of money to a certain individual or entity at a specified date or on demand.

Face Amount

An amount at which bonds sell if the market rate equals the contract rate.