If a Security Pays $55 in One Year and $133

question 78

Multiple Choice

If a security pays $55 in one year and $133 in three years,its present value is $150 if the interest rate is

• A)5 percent.
• B)10 percent.
• C)12.5 percent.
• D)15 percent.

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Definitions:

Premium

The amount paid for an insurance policy, or the difference between the higher price paid for a fixed-income security above its face value.

Insurance Companies

Organizations that provide risk management by compensating for financial losses in exchange for premium payments.

Private Information

Information that is not publicly available and may give an individual or business a competitive advantage.

Hidden Problems

Issues or complications within a system or product that are not immediately obvious or visible.