The concept of present value
A)reveals that discount bonds have higher interest rates than coupon bonds.
B)reveals that fixed payment loans have higher interest rates than discount bonds.
C)is useful in comparing interest rates for different financial instruments.
D)shows that it is unlikely that a simple loan will have a lower interest rate than a discount bond.

Question

Quizplus · Accepted Answer

The concept of present value is useful in comparing interest rates for different financial instruments, regardless of whether they are discount bonds or fixed payment loans. Therefore, option C is correct while options A, B, and D are incorrect.

The Concept of Present Value