1) Time value of money is a very important concept in finance. It means a dollar today is worth more than a dollar tomorrow (future). Why do you think the statement is true? Please try to come up with as many arguments supporting the statement as you can.

2) To counteract the destruction of the pandemic on the economy, the Fed has lowered the interest rate close to zero to stimulate the economy. What is the impact of lower interest rate on asset prices based on what we talked about this week? The asset prices are essentially the present value of all the cash flows expected to be generated by the asset in the future. Assuming the future expected cash flows are not going to be affected by the lower interest rate, do you think asset prices (such as stocks or bonds prices) will be lower or higher when Fed lowers interest rate holding other factors the same?