Assuming a Market Rate of Interest Equal to 7 Percent

question 254

Multiple Choice

Assuming a market rate of interest equal to 7 percent and anticipated inflation is 2 percent, what is the real (adjusted for inflation) present value of $200 to be received one year from today?

• A) $190
• B) $214
• C) $187
• D) $210

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Definitions:

Consolidated Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as a single entity.

Future Date

A specific day in the future, identified for the occurrence of a particular event or for the completion of a specified task or agreement.

U.S. Dollars

The authorized fiscal medium of the United States, extensively employed as a reference and backup currency all over the world.

Supply And Demand

Supply and demand is a fundamental economic model that describes how the availability of goods (supply) and the desire for them (demand) interact to determine market prices.