To Calculate a Cash Flow's Present Value (PV), You Must

question 4

True/False

To calculate a cash flow's present value (PV), you must compound it.

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Definitions:

Interest Rate Parity

A theory suggesting that the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.

Annualized Return

The geometric average amount of money earned by an investment each year over a given time period, expressed as a percentage.

Spot Exchange Rate

The current market price for exchanging one currency for another, used for immediate currency transactions.

Exchange Rate

The value of one currency for the purpose of conversion to another.