With a Constant Nominal Interest Rate Equal to I, the Present

question 16

Multiple Choice

With a constant nominal interest rate equal to i, the present discounted value of $1.00 to be received 6 years from today is equal to:

• A) 1 + i.
• B) 1/(1 + i)6.
• C) i6.
• D) 6(1 + i).
• E) (1 + i)6.

---

Definitions:

Confirmation Bias

The tendency to take evidence that’s consistent with your beliefs more seriously than evidence inconsistent with your beliefs.

Availability Heuristic

The availability heuristic is a cognitive bias that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Representativeness Heuristic

A cognitive shortcut that people use to classify something as belonging to a certain category based on how similar it is to a typical case from that category.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.