Why is the present value of an amount lesser than its value that is to be received (paid) in the future? a.Deflation causes investors to lose purchasing power when their pesos are invested for greater than one year. b.Investors have the opportunity to earn positive rates of return, so any amount invested today should grow to a larger amount in the future. c.Investments generally are not as good as those who sell them suggest, so investors usually are not willing to pay full face value for such investments, thus the price is discounted. d.Because investors are taxed on the income received from investments they never will buy an investment for the amount expected to be received in the future. e.None of the choices is a correct answer.
Why is the present value of an amount lesser than its value that is to be received (paid) in the future?
a.Deflation causes investors to lose
b.Investors have the opportunity to earn positive
c.Investments generally are not as good as those who sell them suggest, so investors usually are not willing to pay full face value for such investments, thus the price is discounted.
d.Because investors are taxed on the income received from investments they never will buy an investment for the amount expected to be received in the future.
e.None of the choices is a correct answer.
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