If the Interest Rate Is 6% and Will Remain 6

question 4

Multiple Choice

If the interest rate is 6% and will remain 6% forever, how much would a rational investor be willing to pay for an asset that will pay him 8,480 dollars 1 year from now, 1,123 dollars 2 years from now, and nothing at any other time?

• A)9,000 dollars
• B)63,000 dollars
• C)150,000 dollars
• D)8,000 dollars
• E)10,000 dollars

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Definitions:

Word Vocabulary

The set of words known and used by a person in speech and writing.

Sensorimotor Period

A developmental stage in early childhood (typically from birth to 2 years) where infants learn about their environment through sensory experiences and motor actions.

Nonmatching-To-Sample Task

A behavioral test in cognitive science where the subject must select the object that is different from a sample object presented earlier.

Frontal Lobes

The part of the brain located at the front of each cerebral hemisphere, involved in complex behavioral functions, decision making, and voluntary movement.