Steve Is Offered an Investment Where for Every $1

question 23

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 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) He ignores the fact that the costs and benefits of the investment are not stated in the same terms.
• B) He ignores the benefits of consuming the $1.00 today against the benefits of consuming the $1.00 five years from now.
• C) He fails to consider the costs of not consuming the $1.00 today.
• D) He considers that the value of the cash he may have in the future is the same as the value of cash he has today.

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Definitions:

Structural Proteins

Proteins that play a role in building and maintaining the three-dimensional structures of cells, tissues, and organs, contributing to their shape and structural integrity.

Hormones

Chemical messengers produced by endocrine glands that travel through the bloodstream to target organs, regulating various bodily functions and processes.

Neurotransmitters

Chemicals that transmit signals across a synapse from one neuron to another neuron or to a target cell in a muscle or gland.

Synaptic Cleft

Gap separating the neuronal presynaptic membrane from the postsynaptic membrane.