While Driving His Girlfriend to Work, Nate Narrowly Avoided a Collision

question 48

Multiple Choice

While driving his girlfriend to work, Nate narrowly avoided a collision with another vehicle. Moments later, he experienced an unusually warm glow of affection for his girlfriend. His romantic reaction is best explained in terms of

• A) social exchange theory.
• B) the two-factor theory of emotion.
• C) social facilitation.
• D) the mere exposure effect.

---

Definitions:

Discount Rate

Within DCF analysis, it's the rate employed to compute the present economic value of expected future cash inflows.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.

Compound Rate

The rate at which interest on an investment or loan is calculated on both the initial principal and the accumulated interest from previous periods.

Time Value of Money

The concept that a sum of money is worth more now than the same amount in the future due to its potential earning capacity.