Which would you rather have? a) $1,000, 5 years from now at 6% interest or b) $1,000, 3 years from now if the interest rate is 12%.
What will be an ideal response?
a) $1,000 x 74.73 = $747.30
b) $1,000 x 71.18 = $718.00
The present value of a) is greater than the present value of b).
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The key objective of purchases by the Federal Reserve of over $1 trillion worth of debt issued by private firms was ________
A) to avoid the bankruptcy of the issuing firms B) to manage expectations C) to prevent such firms from being acquired by foreign companies D) to stimulate spending by firms and households
An investor is more likely to buy a firm's stock if the firm's income statement shows ________ and if its balance sheet shows ________
A) a large net worth; a large price-earnings ratio B) a large after-tax profit; a large net worth C) a large price-earnings ratio; a large dividend yield D) low opportunity costs; large liabilities