In Time-Value of Money Analysis, a Decrease in Interest Rates

question 212

Multiple Choice

In time-value of money analysis, a decrease in interest rates

• A) raises the present value of a future amount.
• B) lowers the present value of a future amount.
• C) raises the future value of a present amount.
• D) has no effect on present or future amount.

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Definitions:

Independent Variables

Variables in an experiment or model that are manipulated or categorized to observe their effect on dependent variables.

Goodness of Fit

A statistical test used to determine how well observed data match the expected data from a model.

Estimated Regression Equation

The estimate of the regression equation developed from sample data by using the least squares method. For simple linear regression, the estimated regression equation is yˆ = b0 + b1x.

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated, making it difficult to distinguish their individual effects on the dependent variable.