STreasury Bond Will Pay a Lump Sum of $1, 000

question 20

Multiple Choice

S.Treasury bond will pay a lump sum of $1, 000 exactly 3 years from today.The nominal interest rate is 6%, semiannual compounding.Which of the following statements is CORRECT?

• A) The PV of the $1, 000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.
• B) The periodic interest rate is greater than 3%.
• C) The periodic rate is less than 3%.
• D) The present value would be greater if the lump sum were discounted back for more periods.
• E) The present value of the $1, 000 would be smaller if interest were compounded monthly rather than semiannually.

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Definitions:

Positive Reinforcement

involves the addition of a motivating/reward stimulus following a desired behavior, making it more likely the behavior will occur again.

Productive Language

The aspect of language ability that involves producing words, sentences, and expressions, enabling individuals to communicate their thoughts and ideas.

Receptive Language

The capability of grasping or making sense of language whether it is listened to or read.

Telegraphic

Refers to a concise and clear way of communication, often highlighting only essential information, similar to old telegraph messages.