If the Interest Rate Is 5% and Will Remain 5

question 10

Multiple Choice

If the interest rate is 5% and will remain 5% forever, how much would a rational investor be willing to pay for an asset that will pay him 6,300 dollars 1 year from now, 1,102 dollars 2 years from now, and nothing at any other time?

• A)7,000 dollars
• B)6,000 dollars
• C)140,000 dollars
• D)42,000 dollars
• E)8,000 dollars

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Definitions:

Compatriot

An individual from the same country as another person.

Impression Management

The process by which individuals attempt to control the impression others form of them, especially in social and professional settings.

Perceived

The way something is seen or understood by an individual based on their own feelings or thoughts.

Domineering People

Individuals exhibiting controlling, authoritative, or overbearing behavior, often asserting their power over others in various contexts.