Changes in the Discount Rate Used to Complete Net Present

question 22

Multiple Choice

Changes in the discount rate used to complete net present value analysis can have a significant impact on the estimated value of the investment and therefore affect the overall investment decision. As the required internal rate of return (IRR) increases, the net present value will:

• A) decline
• B) increase
• C) remain the same
• D) become zero

Understand the relationship between stock correlation in a portfolio and its overall risk.

Understand the impact of interest rates on investment spending and consumption.

Grasp the effects of changes in the price level on aggregate demand, aggregate supply, and aggregate expenditure.

Comprehend the relationship between consumption, saving, and income.

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Definitions:

Aristotle

An ancient Greek philosopher and scientist, whose works covered a wide range of subjects including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology.

Plato

An ancient Greek philosopher, a student of Socrates and teacher of Aristotle, known for his contributions to metaphysics, epistemology, and ethics.

Industrial-organizational Psychology

The application of psychological theories, principles, and research methodologies in workplace environments to solve organizational and human resource problems.

Clinical Psychology

A branch of psychology that studies, assesses, and treats people with psychological disorders.