Suppose the Term Structure of Interest Rates Is Shown Below

question 43

Multiple Choice

Suppose the term structure of interest rates is shown below: The net present value (NPV) of an investment that costs $4320 and pays $1600 certain at the end of one, three, and five years is closest to ________.

• A)$91.37
• B)$137.05
• C)$114.21
• D)-$114.21

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Definitions:

Blinding

A research design technique where one or more parties in an experiment are unaware of the treatment assignments to prevent bias.

Experimental Unit

The smallest division of the experimental material such that any two units are independent and can be assigned to different treatments.

Cage

A structure of bars or wires in which animals or birds are confined.

Confounding Variable

A variable outside of the researcher's control that can affect the results of a study, potentially leading to misleading conclusions.