The Higher the Discount Rate Used in Determining the Future

question 62

Multiple Choice

The higher the discount rate used in determining the future value of a $1 annuity,:

• A) the greater the future value at the end of a period.
• B) the smaller the future value at the end of a period.
• C) the greater the present value at the beginning of a period.
• D) none of the other answers are correct: the interest has no effect on the future value of an annuity.

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Definitions:

Recovered Memories

A phenomenon where memories of past events, often traumatic, are recalled after being forgotten or repressed.

Traumatic Life Experiences

Events that cause psychological trauma due to their distressing nature.

Long-Term Memory

A type of memory responsible for the storage of information over an extended period, ranging from a few days to decades.

Credible

Deserving of trust or belief; viewed as reliable or believable based on evidence or reputation.