In Fisher's Model of the Determination of the Rate of Return,the

question 16

Multiple Choice

In Fisher's model of the determination of the rate of return,the price of a "future good" is:

• A)less than the price of a current good if the interest rate is negative.
• B)equal to the price of a current good if the interest rate is positive.
• C)greater than the price of a current good if the interest rate is positive.
• D)less than the price of a current good if the interest rate is positive.

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Definitions:

Periodic Interest Rate

The interest rate charged or earned over a particular period of time, often monthly, quarterly, or annually, as opposed to the annual percentage rate (APR).

Annuity

A retirement funding product that assures fixed payments over time to the receiver, primarily aimed at providing a stable income for retirees.

Payment Interval

The regularity with which payments are dispensed, for instance, on a monthly, quarterly, or yearly basis.

Compounded Quarterly

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan, done four times a year.