If Interest Rates Are Positive, Which of the Following Has

question 63

Multiple Choice

If interest rates are positive, which of the following has the highest current value

• A) $350 a year from now.
• B) $350 now.
• C) $350 two years from now.
• D) All of the above have the same current value.

---

Definitions:

Expected Value

The long-run average value of repetitions of the experiment it represents, computed as the weighted average of all possible values.

Poisson Random Variable

Represents the number of events occurring in a fixed interval of time or space, assuming that these events happen with a known constant mean rate and independently of the time since the last event.

Random Variable

A variable whose possible values are numerical outcomes of a random phenomenon, used in probability and statistics to model randomness.

Expected Value

The anticipated value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.