Suppose the Interest Rate Is 5 Percent

question 151

Multiple Choice

Suppose the interest rate is 5 percent.Consider three payment options:
1) $500 today.
2) $520 one year from today.
3) $550 two years from today.
Which of the following is correct?

• A)1 has the lowest present value and 3 has the highest.
• B)2 has the lowest present value and 1 has the highest.
• C)3 has the lowest present value and 2 has the highest.
• D)None of the above is correct.

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Definitions:

Spatial Separation

The physical distancing between groups or areas, often leading to social segregation or differences in access to resources.

Institutional Separation

The division of societal structures or organizations into distinct entities, often to maintain independence or for the purpose of specializing in different areas.

Segregation

Involves the spatial and institutional separation of racial or ethnic groups.

Ethnic Identity

Ethnic identity is the sense of belonging to a specific ethnic group, characterized by shared cultural heritage, language, religion, and traditions.