Given the Future Value,which of the Following Will Contribute to a Lower

question 103

Multiple Choice

Given the future value,which of the following will contribute to a lower present value?

• A) Higher discount rate
• B) Fewer time periods
• C) Less frequent discounting
• D) Lower discount factor

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Definitions:

Expected Returns

The average of all possible returns for an investment, weighted by the likelihood of each outcome.

Standard Deviations

A statistical measure indicating the amount of variation or dispersion from the average or expected value, widely used in finance to assess investment risk.

Risk Premium

The extra return expected by investors for holding a risky asset over a risk-free asset, compensating them for the risk of loss.

Treasury Bill

Short-term government securities with maturity periods typically less than a year, considered to be risk-free investments.