You Are Expecting to Receive $750 at Some Time in the Future.Which

question 72

Multiple Choice

You are expecting to receive $750 at some time in the future.Which of the following would unambiguously decrease the present value of this future payment?

• A)Interest rates rise and you get the payment sooner.
• B)Interest rates rise and you have to wait longer for the payment.
• C)Interest rates fall and you get the payment sooner.
• D)Interest rates fall and you have to wait longer to get the payment.

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Definitions:

Delivery Date

The specific date on which the delivery of the commodities, securities, or other assets is scheduled to occur in a contract.

Financial Futures

Contracts to buy or sell financial instruments, like currencies or government bonds, at a predetermined future date and price.

S&P 500 Index

A stock market index in the United States comprised of 500 major companies with publicly traded shares on the New York Stock Exchange or NASDAQ, determined by their market capitalizations.

Nikkei Index

A stock market index for the Tokyo Stock Exchange, representing the performance of leading Japanese companies.