This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Write the equation for present value. How are prices and interest rates related? Refer to your ... (Read 60 times)

ahriuashd

  • Hero Member
  • *****
  • Posts: 535
on: Jul 10, 2018
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?

Question 2

Consider the TVM equation: Present value and time period are inversely related.
 
  Indicate whether the statement is true or false.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

dreamfighter72

  • Sr. Member
  • ****
  • Posts: 355
Reply #1 on: Jul 10, 2018
Answer to Question 1

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.

Answer to Question 2

Answer: TRUE


ahriuashd

  • Member
  • Posts: 535
Reply 2 on: Jul 10, 2018
Gracias!

kilada

  • Member
  • Posts: 311
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

More than 2,500 barbiturates have been synthesized. At the height of their popularity, about 50 were marketed for human use.

Did you know?

Over time, chronic hepatitis B virus and hepatitis C virus infections can progress to advanced liver disease, liver failure, and hepatocellular carcinoma. Unlike other forms, more than 80% of hepatitis C infections become chronic and lead to liver disease. When combined with hepatitis B, hepatitis C now accounts for 75% percent of all cases of liver disease around the world. Liver failure caused by hepatitis C is now leading cause of liver transplants in the United States.

Evolution of the Sun's luminosity, radius and effective temperature compared to the present Sun Evolution of the Sun's luminosity, radius and effective temperature compared to the present Sun
Procedures and Diagnostic Tests Related to the Cardiovascular System Procedures and Diagnostic Tests Related to the Cardiovascular System
Age-related changes in crystallized and fluid tasks. Performance on tests of fluid abilities peaked ... Age-related changes in crystallized and fluid tasks. Performance on tests of fluid abilities peaked ...
How to classify whether an equation is linear, quadratic, or cubic How to classify whether an equation is linear, quadratic, or cubic
How to calculate simple interest (Part 4; P = I/rt) How to calculate simple interest (Part 4; P = I/rt)
In Canada, disease-related deaths become increasingly common during middle adulthood In Canada, disease-related deaths become increasingly common during middle adulthood
Video: Stress and Immune System Animation

For a complete list of videos, visit our video library