5. Suppose that as a lottery prize you win a trip worth $8,000. You are uninterested in the trip, but under the terms of the prize you can collect the $8,000 in cash, but only if you do not redeem the prize for 3 years. If the interest rate is 5%, the present value of the prize is a) $6911 b) $7619 c) $8,000 d) $21,786

5. Suppose that as a lottery prize you win a trip worth $8,000. You are uninterested in the trip, but under the terms of the prize you can collect the $8,000 in cash, but only if you do not redeem the prize for 3 years. If the interest rate is 5%, the present value of the prize is a) $6911 b) $7619 c) $8,000 d) $21,786

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 5SCQ: Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is...

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Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?
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