Assume That Your Required Rate of Return Is 12 Percent

question 11

Multiple Choice

Assume that your required rate of return is 12 percent and you are given the following stream of cash flows: If payments are made at the end of each period, what is the present value of the cash flow stream?

• A) $66,909
• B) $57,323
• C) $61,815
• D) $52,345
• E) $62,029

---

Definitions:

Loss Aversion

A psychological principle stating individuals prefer avoiding losses to acquiring equivalent gains.

Regret Avoidance

A cognitive process that leads investors to make decisions in a way that minimizes the regret they might feel from taking or not taking certain actions.

Mental Accounting

The tendency of individuals to allocate and segregate their personal finances into separate accounts based on subjective criteria, often leading to irrational financial decision-making.

Technical Trading Strategies

Methods used by traders that rely on technical analysis and market indicators to make buy or sell decisions.