Steve Is Offered an Investment Where for Every $1

question 108

Multiple Choice

Steve is offered an investment where for every $1.00 invested today,he will receive $1.10 at the end of each of the next five years.Steve concludes that in five years time he will have $1.10 for every $1.00 invested and that this investment will increase his personal value.What is Steve's major error in reasoning when making this decision?

• A)Costs and benefits must be in the same terms to be compared.
• B)There may be other investments that he can make that will offer even bigger benefits.
• C)The investment may have hidden costs that will reduce the amount of benefit he receives.
• D)The value of the cash he has today is greater than the value of the cash he may have in the future.
• E)Whether he has enough spare cash with which to invest.

---

Definitions:

Specific Person

An individual characterized by unique attributes or circumstances, often highlighted in studies or examples to illustrate a particular point.

More Intense

A higher degree of strength, concentration, or force in an activity, situation, or characteristic.

Emotions

Complex psychological states involving physiological arousal, expressive behaviors, and conscious experience.

Fleeting

Refers to something that lasts for a very brief time; transient or short-lived.