The Present Value of a Note Will Equal Its Face

question 42

Multiple Choice

The present value of a note will equal its face value when

• A)the face rate and the stated interest rate are the same.
• B)risk is low.
• C)the effective and stated interest rates are the same.
• D)the effective and the market interest rates are the same.

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Definitions:

Significance Level

A threshold of probability set before conducting a hypothesis test, below which the null hypothesis is rejected, symbolized as alpha (α).

Standard Deviation

Standard deviation is a statistical measure that quantifies the variation or dispersion of a set of data points or values around their mean.

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