The Present Value of a Single Future Sum

question 22

Multiple Choice

The present value of a single future sum

• A) increases as the number of discount periods increases.
• B) is generally larger than the future sum.
• C) depends upon the number of discount periods.
• D) increases as the discount rate increases.

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Definitions:

Broad Stock Market

An inclusive term for the overall stock market, reflecting the performance of a wide and diverse range of companies and sectors.

Expansionary Monetary Policy

A central bank policy aimed at increasing the money supply to stimulate economic activity.

Real Interest Rates

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true yield on an investment.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.