A Given Future Value of Money Would Have a Smaller

question 263

Multiple Choice

A given future value of money would have a smaller present value if

• A)the interest rate used in discounting is higher.
• B)the length of time over which it is "discounted" is shorter.
• C)the interest rate is zero.
• D)there is no compounding of interest.

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Definitions:

Call Protection

An initial period during which a callable bond may not be called.

Conversion Feature

An option within certain bonds or preferred stocks that allows them to be converted into a predetermined amount of the issuer's common stock.

Dividend Yield

The annual dividend payments to shareholders expressed as a percentage of the stock's current price.

Yield-To-Maturity

The total return anticipated on a bond if it is held until it matures, including all payments from interest and principal, calculated as an annual rate.