You Are Given Two Choices of Investments, Investment a and Investment

question 27

Multiple Choice

You are given two choices of investments, Investment A and Investment B. Both investments have the same future cash flows. Investment A has a discount rate of 4%, and Investment B has a discount rate of 5%. Which of the following is true?

• A) The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B.
• B) The present value of cash flows in Investment A is lower than the present value of cash flows in Investment B.
• C) The present value of cash flows in Investment A is equal to the present value of cash flows in Investment B.
• D) No comparison can be made-we need to know the cash flows to calculate the present value.

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Definitions:

Face Validity

The extent to which a test or procedure appears effective in terms of its stated aims, at face value, to untrained individuals.

Standardized Assessments

Tools or tests that are uniformly administered and scored across different individuals or groups to measure specific factors such as abilities, aptitudes, or characteristics.

Normative Group

A reference group against which individuals or other groups' behaviors, attitudes, or conditions are compared and assessed.

Diagnosis

The identification of the nature and cause of a health problem, usually through evaluation of patient history, examination, and review of diagnostic tests.