Question 7 How are future values affected by changes in interest rates? The lowe
ID: 2642020 • Letter: Q
Question
Question 7
How are future values affected by changes in interest rates?
The lower the interest rate, the larger the future value will be.
The higher the interest rate, the larger the future value will be.
Future values are not affected by changes in interest rates.
One would need to know the present value to determine the imp
a.The lower the interest rate, the larger the future value will be.
b.The higher the interest rate, the larger the future value will be.
c.Future values are not affected by changes in interest rates.
d.One would need to know the present value to determine the imp
Explanation / Answer
b.The higher the interest rate, the larger the future value will be.
Future value is the present value of an initial investment times one plus the interest rate for each year you hold it. The higher the interest rate, the higher the future value.
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