If the Annual Interest Rate Is I,the Present Value of $X

question 6

Multiple Choice

If the annual interest rate is i,the present value of $X to be received at the end of each of the next n years is:

• A) $X/i.
• B) $X/(1 + i)ⁿ.
• C) \( \$ X \sum_{t=1}^{n} 1 /(1+i)^{t} \)
• D) $X[(1 + i)ⁿ] / [ i(1 + i)ⁿ - 1].
• E) $X / [i(1 + i)ⁿ - 1].

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Definitions:

Portfolio Variance

A measure of the dispersion of returns of a portfolio, representing the risk inherent in holding a portfolio of multiple assets.

Cyclical Stock

Stocks whose prices are affected by macroeconomic or systemic changes in the overall economy, usually exhibiting high volatility in line with the business cycle.

Countercyclical Stock

A stock whose performance is inversely related to the economy's performance, often doing well during economic downturns.

U.S. Treasury Bills

Short-term government securities issued at a discount from par value and mature in a year or less, representing a secure debt obligation of the US government.