Which of the Following Is the Correct Expression for Finding

question 43

Multiple Choice

Which of the following is the correct expression for finding the present value of a $500 payment two years from today if the interest rate is 4 percent?

• A)$500/(1.04)²
• B)$500 - 500(1.04)²
• C)$500 - $500/(.04)²
• D)None of the above is correct.

---

Definitions:

Bank Panics

Situations in which a large number of bank customers attempt to withdraw their deposits simultaneously due to fears that the bank will become insolvent.

Checking Deposits

Balances in bank accounts from which funds can be withdrawn by writing a check or using a debit card, usually without any interest benefits.

Financial Intermediaries

Institutions that act as middlemen in financial transactions, typically between savers and borrowers.

Commercial Banks

Financial institutions that offer a wide range of services to businesses and consumers, including deposit accounts, loans, and money transfers.