If the Interest Rate Is 5 Percent, What Is the Present

question 37

Multiple Choice

If the interest rate is 5 percent, what is the present value of $10,000 received three years from now?

• A)$8,638
• B)$9,000
• C)$11,600
• D)$11,000

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Definitions:

Speculative

Involving financial actions that carry a significant risk of losing all value but also hold the promise of substantial gains.

Ratings

Assessments or evaluations used to rank or score entities based on certain criteria, such as financial strength or quality.

Money Market Instruments

Financial instruments that provide liquidity and short-term financing in the money market, such as treasury bills, commercial paper, and certificates of deposit.

High-risk Securities

Financial instruments that offer a high potential return but also present a higher likelihood of loss.