The Present Value of a Given Future Stream of Benefits

question 92

Multiple Choice

The present value of a given future stream of benefits will be lower when the benefits are ________ and the interest rate is ________.

• A)nearer in time; lower
• B)accruing in the first time period only; lower
• C)more distant in time; higher
• D)equalized over a ten-year period; zero
• E)more distant in time; lower

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Definitions:

Individual Investors

Private investors who buy and sell securities for their personal account, not on behalf of an organization.

Selling Groups

A consortium of financial institutions or broker-dealers who work together to sell a large issuance of securities, such as bonds or stocks, to the public.

Average Spread

The average spread refers to the average difference between bid and ask prices over a specified time period, measuring market liquidity.

Security Issues

Security Issues refer to the new issuance of stocks or bonds by a company in order to raise capital from investors in the public or private markets.