Answer the following statements true (T) or false (F)
1. You believe that a certain asset, like a business or shop, is going to be worth $100 million in five years. If the interest rate is 5%, then that asset will be worth $75 million today.
2. Other factors constant, if the interest rate is higher, the present value of a certain future amount will be smaller.
3. Joseph is considering purchasing a condo. He has the option of buying one in Midtown with a present value of $150,000 or one in downtown with a future value of $200,000. If the current market interest rate is 5 percent and he wants to buy the home with the highest future value in 5 years, he should buy the condo in downtown.
4. The current price of an asset is equal to the future value of its expected returns or income streams.
5. Stockholders of a company can benefit from either capital gains or dividends when the company is profitable
1. FALSE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
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Most economists see the business cycle
A) as a regular pattern of recessions and expansions of the same length and intensity. B) occurring as a result of anticipated macroeconomic changes in the marketplace. C) as randomly occurring, resulting from unpredictable long-run changes in the macroeconomy. D) as resulting from the response of households and firms to macroeconomic shocks.
The existence of differences between the average earnings of men and women: a. proves the existence of discrimination
b. may be partially due to factors other than wage discrimination. c. proves that men on average invest more in human capital than do women. d. indicates that men are on average smarter than women are.
What is the major reason for oil price to go up in the 1970s?
A) formation of the OPEC B) fast of growth of emerging economies C) new energy D) higher demand from the US
Howie just bought a new digital camera to replace his old one. His old one works perfectly fine and would sell on Craigslist for $100. The fact that Howie would not pay $100 for it, yet continues to let it sit in his closet unused is explained by:
A. the implicit cost of ownership. B. the explicit cost of ownership. C. ignoring sunk costs. D. the explicit cost of sales.