Suppose the Interest Rate Is 5 Percent

question 202

Multiple Choice

Suppose the interest rate is 5 percent. Consider three payment options:
1) $500 today.
2) $520 one year from today.
3) $550 two years from today.
Which of the following is correct?

• A) 1 has the lowest present value and 3 has the highest.
• B) 2 has the lowest present value and 1 has the highest.
• C) 3 has the lowest present value and 2 has the highest.
• D) None of the above is correct.

Recognize the role of professional associations in developing ethical standards.

Understand the legal implications and requirements related to counseling practice and assessment.

Identify the ethical considerations in forensic evaluations and the primary obligations of counselors in these contexts.

Understand the importance of informed consent in the counseling process and what it should cover.

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Definitions:

Exact Value

The precise numerical quantity or measurement without approximation.

Estimate

To make an approximate judgment or calculation of the value, number, quantity, or extent of something.

Winner's Curse

A phenomenon that occurs in auctions where the winning bidder pays more than what the item is actually worth, usually because of incomplete information or misjudgment.

Common-value Auction

an auction format where the item for sale is of the same value to all bidders, but the bidders have different information about the item's actual value.