Write the equation for present value. How are prices and interest rates related? Refer to your equation when answering the first part of this question
Give an example of a real-world situation in which knowing the relationship between prices and interest rates would be valuable.
What will be an ideal response?
Answer: From the present value equation, PV = FV × , the student should understand that prices (i.e., present values) are inversely related to interest rates. An increase in one leads to a decrease in the other if we hold the other inputs constant. We see this in many places in the economy such as the negative impact on stock and bond prices when interest rates rise or are expected to rise.
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On October 21, Martin, Inc. provided a service to a customer and received $1,400 cash. The journal entry to record this transaction would include:
A. A debit to Cash and a credit to Service Revenue B. A debit to Accounts Receivable and a credit to Service Revenue C. A debit to Service Revenue and a credit to Cash D. A debit to Cash and a credit to Accounts Receivable
The list of secondary sources at the end of a report can be labeled "References" when
A) it contains fewer than 10 items. B) it contains more than 50 items. C) it is incomplete. D) you want the tone of your report to be conversational. E) you include works consulted but not mentioned in your report.