$100 Today Is Worth

question 10

Multiple Choice

$100 today is worth

• A) the same as $100 to be received in one year, since the inflation rate has been low recently and funds received in the near future should have the same purchasing power that they have today.
• B) less than $100 to be received in one year, since many people will spend money foolishly today and will become more careful in their spending habits as they mature.
• C) more than $100 to be received in one year, since you can invest the money received today for this period, leaving you with more than $100 in the future.
• D) the same as a future receipt of $100, since the physical characteristics of U.S. currency are unchanged for long periods of time.
• E) less than $100 received by someone ten years ago, since many products have been improved over this time period.

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Definitions:

Contract Rights

Legal entitlements derived from agreements between parties, which outline obligations, benefits, and conditions agreed upon.

Assignable

Capable of being transferred or made over to the legal control of another party, commonly referring to rights or property under contract.

Donee Beneficiary

A third party who stands to benefit from the execution of a contract, although not a direct party to the agreement.

Life Insurance

A contract between an insurer and a policyholder in which the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person.