Answered: Assuming an inflationary economy, the…

Assuming an inflationary economy, the future value interest factor is O always greater than 1.0. O always uncertain. O always equal to 1.0. O always less than 1.0.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 4MC

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Concept explainers

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.

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Assuming an inflationary economy, the future value interest factor is
O always greater than 1.0.
O always uncertain.
O always equal to 1.0.
O always less than 1.0.

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