You Just Deposited $2,500 in a Bank Account That Pays

question 60

Multiple Choice

You just deposited $2,500 in a bank account that pays a 4.0% nominal interest rate, compounded quarterly.If you also add another $5,000 to the account one year (4 quarters) from now and another $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now?

• A) $15,234.08
• B) $16,035.88
• C) $16,837.67
• D) $17,679.55
• E) $18,563.53

---

Definitions:

Adaptive Expectations Theory

An economic theory that proposes individuals adjust their expectations for the future based on recent past experiences and events.

Certainty Equivalent Theory

An economic theory that quantifies how much risk an investor is willing to take on, expressed as the minimum guaranteed amount an investor would accept rather than take a gamble.

Theories Of Expectations

Economic theories that explore how the expectations of individuals or firms about future economic conditions affect their current decision-making and behavior.

Rational Expectations Theory

A concept suggesting that individuals make decisions based on their rational outlook, available information, and past experiences.