Based on a $14

question 138

Multiple Choice

Based on a $14.3 trillion debt held by the public in mid-2017, a 1-percentage-point increase in the nominal interest rate ultimately increases interest costs by _____

• A) 143 billion.
• B) 14.3 billion.
• C) 1.43 billion.
• D) 0.143
• E) 0.0143

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Definitions:

Yield

The annual percentage yield from an investment, like dividends or interest earned, calculated based on the cost of the investment, its present market price, or its nominal value.

Future Cash Flows

Estimated streams of future financial income or expenditure, related to investments, projects, or business operations.

Rate of Return

A measure of the profitability of an investment, expressed as a percentage of the original investment.

Present Value

The present valuation of money expected in the future or cash inflow sequences, with adjustments for a predetermined rate of return.