If You Win $1 Million in a Lottery and Are

question 166

Multiple Choice

If you win $1 million in a lottery and are paid in installments,_____

• A)the future value of these payments is $1 million.
• B)the present value of these payments equals $1 million if the interest rate is zero.
• C)the present value of these payments equals $1 million if the interest rate is 10 percent.
• D)the present value of the payments exceeds $1 million if the interest rate is positive.
• E)the future value of the payments is less than $1 million if the interest rate is equal to zero.

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Definitions:

Exponential Distribution

A continuous probability distribution used to model the time between events in a process with a constant rate.

Probability

The mathematical analysis of events governed by chance, quantifying how likely they are to happen.

Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, characterized by a constant rate parameter.

Probability

Probability is a measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.