Having Received a Large Inheritance, a Child's Parents Wish to Establish

question 71

Multiple Choice

Having received a large inheritance, a child's parents wish to establish a trust for the child's college education. If 5 year(s) from now they need an estimated $60,000, how much should they set aside in trust now, if they invest the money at the given rate of interest. 17.5% compounded quarterly _________
17) 5% compounded continuously _________

• A) $25,481.29, $25,170.27
• B) $25,170.27, $25,933.35
• C) $25,481.29, $25,011.72
• D) $25,011.72, $25,170.27

---

Definitions:

Social Exchange Theory

A theory that describes how the relationship between individuals is formed by weighing the benefits and costs of interacting with each other.

Outgroup Homogeneity

The perception that members of an outgroup are more similar to each other than they really are, typically compared to the perceived diversity within one's own group.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, often leading to an oversimplification of cause and effect.

Ingroup Bias

The tendency to favor one's own group over other groups, often leading to preference and loyalty towards members of the ingroup.