Suppose That the Rate of Interest Increases

question 26

Multiple Choice

Suppose that the rate of interest increases.What will happen to the discounted present value of an investment?

• A)It will increase.
• B)It will decrease.
• C)It will remain unchanged.
• D)It depends on the magnitude of the change.

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Definitions:

Current Flow

The movement of electric charge carriers, such as electrons, through a conductor or circuit.

Ohm's Law

A fundamental principle of electricity stating that the current through a conductor between two points is directly proportional to the voltage across the two points.

Dielectric

Something that limits or blocks current flow. Nonconducting dielectric material is used between poles in a capacitor and dielectric grease can be used to protect exposed terminals.

Conductors

Materials that allow the flow of electrical current, commonly used in electrical wiring and electronics for the transmission of electricity.