When Discount Rate

question 3

Multiple Choice

When 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.

---

Definitions:

Indorsement

The act of signing the back of a negotiable financial instrument, thereby making it payable to someone other than the named holder.

Signature

A person's name written in a distinctive way as a form of identification in authorizing a document.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a designated entity from the drawer's account.

Order Paper

A negotiable instrument that is payable to a specific person or their order, requiring endorsement for transfer.