1. The present value of a lump-sum of money to be received in the future _______ as the discount rate increases and _______ the longer you must wait to receive the money. decreases; decreases decreases; increases increases; decreases increases; increases
2. Describe what happens when an organization extends credit to patients.
3. Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 3.80%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for T-bonds is zero, what is the yield on a 1-year T-bond expected to be one year from now?
A. 3.60%
B. 3.35%
C. 2.77%
D. 4.36%
E. 4.10%