Suppose That the Interest Rate Is 7 Percent

question 33

Multiple Choice

Suppose that the interest rate is 7 percent.Consider four payment options: Option A: $500 today.
Option B: $550 one year from today.
Option C: $575 two years from today.
Option D: $600 three years from today.
Which of the payments has the highest present value today?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Nonparametric Method

A type of statistical method that does not assume a specific distribution model for the data, making it suitable for data that doesn't fit normal distribution assumptions.

Wilcoxon Rank Sum Test

A statistical test that does not assume a specific distribution, designed to assess whether two separate samples originate from an identical distribution.

Mann-Whitney Test

A nonparametric test used to compare differences between two independent groups when the dependent variable is either ordinal or continuous, but not normally distributed.

Hypotheses Testing

An analytical technique in statistics that leverages a sample's data to examine a conjecture concerning a characteristic of the entire population.