Suppose, for simplicity, that a bank uses a single interest rate for loans and deposits, there is no inflation, and all unspent money is deposited in the bank. The interest rate measures which of the following?
the cost of using a dollar today rather than a year from now
the benefit of delaying the use of a dollar from today until a year from now
the price of borrowing money calculated as a percentage of the amount borrowed
| A. |
| B. |
| C. |
| D. |
| E. |
If the interest rate is zero, then the present value of a dollar received at the end of the year is
| A. |
| B. |
| C. |
| D. |
| E. |
If the interest rate is 10%, the present value of $1 paid to you one year from now is
| A. |
| B. |
| C. |
| D. |
| E. |
If the interest rate is 5%, the future value of $100 lent today is
| A. |
| B. |
| C. |
| D. |
| E. |
What is the present value of $100 realized two years from now if the interest rate is 10%?
| A. |
| B. |
| C. |
| D. |
| E. |