The Concept of Present Value Is That an Amount of Cash

question 89

True/False

The concept of present value is that an amount of cash to be received at some date in the future is the equivalent of the same amount of cash held at an earlier date.

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Definitions:

Certificate of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate, issued by banks to individuals investing money for a fixed period of time.

Tax Bracket

Categories that tax rates apply to, which are based on levels of income; each bracket has a different tax rate associated with it.

Equivalent Taxable Yield

The yield on a tax-exempt security that would be required to produce the same after-tax yield as a taxable security, given an investor's tax rate.

State Bond

Debt securities issued by a state government to finance its expenditures, offering a way for investors to lend money to the government in exchange for interest payments.