Martha Left an Inheritance to Her Grandson That Will Pay

question 19

Multiple Choice

Martha left an inheritance to her grandson that will pay him $1,500 on the first day of every other year.When computing the PV of this inheritance,the grandson should use:

• A)simple interest.
• B)a semiannually compounded discount rate.
• C)an effective annual rate.
• D)a 2-year discount rate.
• E)a semiannual discount rate.

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Definitions:

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of money or property.

Professional Associations

Organizations seeking to further a particular profession, the interests of individuals engaged in that profession, and the public interest.

Standards of Performance

The levels of service or achievement that are expected according to a contract or law.

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A formal recognition procedure that ensures a service, organization, or program meets predefined standards.