How Are Present Values Affected by Changes in Interest Rates

question 91

Multiple Choice

How are present values affected by changes in interest rates?

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

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Definitions:

Ions

Atoms or molecules that carry a net electric charge due to the loss or gain of one or more electrons.

Insulin

A hormone produced by the pancreas that regulates blood sugar levels by facilitating the uptake of glucose into tissues.

Glucose Transport

The process by which glucose is moved across cell membranes, typically involving specific transport proteins, to provide energy to cells.

Cells

The basic structural, functional, and biological unit of all known living organisms, serving as the basic unit of life.