Answered

Discover a world of knowledge and get your questions answered at IDNLearn.com. Our experts are available to provide accurate, comprehensive answers to help you make informed decisions about any topic or issue you encounter.

Select the statement that correctly explains the relationship between interest rates and present or future value.

a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.
b. The interest rate and the present value of an investment are directly related.
c. Assuming other variables stay the same, if the interest rate increases, the future value of an investment decreases.
d. Assuming other variables stay the same, if the interest rate decreases, the present value of an investment decreases.

Sagot :

Zvikoidn

Answer:

a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.

Explanation:

As the Interest rate increases, the Future Cash Flows have to be discounted back by large amounts of interest this gives a smaller Present Value.

Therefore,

The correct relationship is a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.

We value your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. For clear and precise answers, choose IDNLearn.com. Thanks for stopping by, and come back soon for more valuable insights.