Assuming a Constant Cash Flow of $100 and a Discount

question 45

Multiple Choice

Assuming a constant cash flow of $100 and a discount factor of 10 percent, the current value of a share of stock will be

• A)$10
• B)$100
• C)$1,000
• D)$10,000

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Definitions:

Optimal Consumption

The mix of goods and services that maximizes a consumer's utility given their budget constraints.

Initial Endowment

The initial quantity of goods, services, or resources an individual, institution, or country possesses at the start of an economic analysis.

Relative Prices

The price of one good or service compared to another, indicating their exchange rate in the market.

Normal Good

A type of good for which demand increases when income increases and falls when income decreases, with other factors being constant.