A Decrease in Interest Rates Raises ________ of Short-Term and Long-Term

question 30

Multiple Choice

A decrease in interest rates raises ________ of short-term and long-term liabilities and can ________ the value of the firm.

• A) the present value; lower
• B) the present value; increase
• C) the future value; lower
• D) the future value; increase

---

Definitions:

Diversify

The attempt to spread investment risk by selecting a variety of investment options within a portfolio.

Adage

A short, pointed and memorable saying that expresses a truth or insight.

Private Saving

The portion of an individual's or household's income that is not spent on consumption or taxes and is instead set aside for future use.

National Saving

The total amount of savings generated within a country, which equals the sum of private and public savings.