What Single Rate of Discount Would Be Equivalent to a Series

question 162

Multiple Choice

What single rate of discount would be equivalent to a series of 25%/18%/10%?

• A) 55.4%
• B) 53.0%
• C) 41.7%
• D) 34.3%
• E) 44.7%

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Definitions:

Prior Probabilities

Probabilities that are known or assumed before new evidence is introduced, often used in Bayesian inference to update the probability based on new data.

Likelihood Probabilities

The probabilities that reflect the likelihood of different parameter values given a sample of data, used in statistical models and inference.

Expected Value

The sum of all possible values each multiplied by its probability of occurrence, used to determine the average outcome of a random variable.

Perfect Information

refers to a theoretical condition in economics where all participants have complete and accurate information about the market.