The Present Value of Multiple Cash Flows Is

question 21

Multiple Choice

The present value of multiple cash flows is:

• A) greater than the sum of the cash flows.
• B) equal to the sum of all the cash flows.
• C) less than the sum of the cash flows.
• D) higher or lower than the cash flows depending on the interest rate.

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Definitions:

Coin Toss

A random method of deciding between two alternatives by flipping a coin and observing which side lands facing up.

Expected Value

A calculated average of all possible values of a random variable, weighted by their probabilities.

Coin Toss

A random method used to determine a decision, consisting of throwing a coin into the air and checking which side is facing up when it lands.

Expected Value

A statistical concept that calculates the average outcome of a probability event or investment over the long term.