A change in the interest rate:
A. has a larger impact on the present value of a payment to be made far into the future than on one to be made sooner.
B. has a smaller impact on the present value of a payment to be made far into the future than on one to be made sooner.
C. will not make a difference in the present values of two equal payments to be made at different times.
D. has a larger impact on the present value of a bigger payment to be made far into the future than on one of lesser value.
Answer: A
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Assume that Jane has limited wealth to invest in two assets both of which promise her returns worth $3,000 after two years. The first is a bank deposit assuring an interest of 10 percent per annum and the second is a private bond with an interest rate of 8 percent per annum. Which of the two would require a low initial investment and of what amount?
a. The bond requiring an initial investment worth $2,564 . b. The bank deposit requiring an initial investment worth $2,479. c. The bond requiring an initial investment worth $2,479. d. The bank deposit requiring an initial investment worth $2,564.
Arrow's impossibility theorem shows that it is impossible to find a better voting system than pairwise majority voting
a. True b. False Indicate whether the statement is true or false
Sweden and Norway are usually described as ________________ economies.
Fill in the blank(s) with the appropriate word(s).
Dollar bills in the modern economy serve as money because
A) they are backed by the gold stored in Fort Knox. B) they can be redeemed for gold by the central bank. C) they have value as a commodity independent of their use as money. D) people have confidence that others will accept them as money.