In Which of the Following Situations Would It Not Be

question 77

Multiple Choice

In which of the following situations would it not be appropriate to use the following formula: when determining the present value (PV) of a cash flow stream?

• A)when yield curves are flat
• B)when short-term and long-term interest rates vary widely
• C)when the inflation rate is high
• D)when the discount rate is high
• E)when the real interest rate is high

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Definitions:

Ordinal Data

Refers to a type of data which is categorized into ordered levels but the differences between the levels are not necessarily consistent or measurable.

Interval Data

A type of data that not only categorizes variables but also quantifies the differences between these categories, where the intervals between values are interpretable.

Ratio Data

A type of quantitative data that not only offers order and equal intervals between values but also has a natural zero point, enabling ratios to be calculated.

Nominal Data

Data categorized into distinct groups without any inherent order or ranking among the categories.