If the interest rate is positive, the present value of $1000 to be received in ten years is
A. equal to $1000.
B. either greater than $1000 or less than $1000, depending upon the interest rate
C. less than $1000.
D. greater than $1000.
Answer: C
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The quantity equation makes the demand for money depend on
A) the unemployment rate and the level of interest rates. B) the inflation rate and the unemployment rate. C) interest rates and the unemployment rate. D) None of these.
To induce an agent to work hard, a principal may offer the agent a bonus, in other words, an extra payment if a performance target is hit
Suppose that the agent's performance is affected by factors beyond the agent's control, for example umbrellas are demanded more on a rainy day. Under what conditions may the bonus not induce the agent to work harder? A) The agent is very risk averse. B) The agent is very risk loving. C) The agent is risk neutral. D) The principal is risk neutral.