Suppose You Win a Small Lottery and You Are Given

question 65

Multiple Choice

Suppose you win a small lottery and you are given the following choice: You can receive (1) an immediate payment of $5,000 or (2) two annual payments, each in the amount of $2,700, with the first payment coming one year from now, and the second payment coming two years from now. You would choose to take the two annual payments if the interest rate is

• A)2 percent, but not if the interest rate is 3 percent.
• B)3 percent, but not if the interest rate is 4 percent.
• C)4 percent, but not if the interest rate is 5 percent.
• D)5 percent, but not if the interest rate is 6 percent.

---

Definitions:

Knowledgeable Holder

A term that would likely refer to an entity or individual in possession of a negotiable instrument who is well-informed about its terms and standing.

HDC

Holder in Due Course, a term in commercial law referring to a party that has acquired a negotiable instrument in good faith and for value, affording them certain protections.

Bearer Instrument

A financial document that entitles the holder to receive the assets or value stated on the document, with no need to prove ownership.

Stole

The past tense of steal, referring to the act of taking something without permission with the intent to permanently keep it.