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Author Question: What is the formula for the present value of 1 one year from now? If the rate of interest is 5 ... (Read 115 times)

krzymel

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on: Jun 29, 2018
What is the formula for the present value of 1 one year from now? If the rate of interest is 5 percent, what is the present value of 10 to be paid one year from now?
 
  What will be an ideal response?

Question 2

The sale of Treasury securities by the Federal Reserve will, in general,
 
  A) decrease the quantity of reserves held by banks.
  B) not change the money supply.
  C) not change the quantity of reserves held by banks.
  D) increase the quantity of reserves held by banks.


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asdfasdf

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The formula for the present value of 1 one year from now is 1/(1 + r) where r is the market rate of interest. If the interest rate is 5 percent, the present value of 10 to be paid one year from now is 9.52 .

Answer to Question 2

A


krzymel

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Reply #2 on: Jun 29, 2018
Correct answers!


asdfasdf

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Reply #3 on: Jun 29, 2018
Great! Please up vote :D


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