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Author Question: Which is larger: the present value of 1 two years from now or the present value of 1 one year from ... (Read 69 times)

lidoalex

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on: Jun 29, 2018
Which is larger: the present value of 1 two years from now or the present value of 1 one year from now? Explain.
 
  What will be an ideal response?

Question 2

If the implied exchange rate between Big Mac prices in the United States and the Philippines is 68 pesos per dollar, but the actual exchange rate between the United States and the Philippines is 43 pesos per dollar, which of the following would you
 
  expect to see?
  A) a depreciation of the dollar B) an increase in the demand for dollars
  C) an appreciation of the Philippine pesos D) a decrease in the demand for dollars


Ahernandez18

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

The present value of 1 one year from now is greater than the present value of 1 two years from now. At the same interest rate, a individual would have to put a greater amount aside if he wanted to end up with 1 after one year than he would have to if he put the money aside for two years.

Answer to Question 2

B


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