How Are Future Values Affected by Changes in Interest Rates

question 66

Multiple Choice

How are future values affected by changes in interest rates?

• A) The lower the interest rate, the larger the future value will be.
• B) The higher the interest rate, the larger the future value will be.
• C) Future values are not affected by changes in interest rates.
• D) One would need to know the present value in order to determine the impact.

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Definitions:

Cleverly Alters

Deliberately modifies or changes something in a skillful manner to achieve a specific purpose or effect.

Recourse

The right of an individual or entity to seek compensation or legal redress in the event of a breach of contract or other legal injury.

Negotiable

Describes items, like certain documents, that can be transferred from one party to another with the endorsement or delivery, retaining its value.

Ninety Days

A time period equivalent to approximately three months or 90 consecutive days.