Suppose That R and T Are Greater Than Zero, Which

question 45

Multiple Choice

Suppose that r and t are greater than zero, which statement is correct?

• A) Present value interest factors are less than one.
• B) Only Future value interest factors are less than one.
• C) Only Present value interest factors are greater than future value interest factors.
• D) Only Present value interest factors grow as t grows, provided r is held constant.
• E) Present value interest factors are negative.

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Definitions:

Term

A specific period or duration of time during which the conditions of a contract or agreement apply.

Annuity

A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.

Period Of Time

A specific duration or length of time during which events occur or conditions exist.

Perpetual Payments

Payments that continue indefinitely, often seen in perpetuities where an initial investment pays a constant amount to the investor forever.