Terry Has Been Practicing Free-Throw Shots in the Backyard

question 39

Multiple Choice

Terry has been practicing free-throw shots in the backyard. Terry has the chance to shoot a half-court basket for a $10,000 prize at a professional basketball game. Research indicates that Terry is

• A) more likely to make the shot in front of a large crowd than in the backyard, because the added pressure increases the ability to filter out distractions.
• B) less likely to choke under the pressure than a professional athlete, because professionals have their job on the line.
• C) very likely to choke under pressure.
• D) less likely to make the shot if Terry is female.

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Definitions:

Present Value

The present value of a sum of money or series of cash flows expected in the future, discounted at a certain rate of return.

Amortized Loan

A loan repaid in equal periodic amounts (or “killed off” over time).

Repayment Of Principal

The process of paying back the original amount borrowed in a loan, excluding any interest charges.

Effective Annual Return

The interest rate on an investment on an annual basis, accounting for the effect of compounding more than once per year.