When the Discount Rate

question 7

Multiple Choice

When the discount rate:

• A) increases, the present value of a future cash flow decreases.
• B) increases, the present value of a future cash flow increases.
• C) decreases, the present value of a future cash flow will remain the same.
• D) decreases, the present value of a future cash flow decreases.

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Definitions:

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically with dividend payments that are prioritized over those of common stock.

Stock Listing

The inclusion of a company's shares on a stock exchange where they can be bought and sold by investors.

P/E

The price-to-earnings ratio, measuring a company's current share price relative to its per-share earnings.

YTD% Chg

Year-To-Date Percentage Change, a financial metric indicating the percentage change in the value of an investment since the beginning of the current calendar year.