Present Values and Interest Rates Are Inversely Related

question 121

True/False

Present values and interest rates are inversely related.This means that if you deposit $1,000 into an interest-earning account today,it will take longer to reach a future value of $5,000 at an interest rate of 6% than at a rate of 4%.

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Definitions:

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit in the selling price.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Sales Volume

The number of units of a product or service sold in a specific period of time, indicative of consumer demand and business performance.

Demand Elastic

Refers to the degree to which demand for a good or service varies with its price. High elasticity indicates demand changes significantly with price changes, while low elasticity indicates little to no change.