Question
MCQ: 1. A person is presented with a choice between $100 to be received today and $120 to be received in 2 months from now.
MCQ:
1. A person is presented with a choice between $100 to be received today and $120 to be received in 2 months from now. The person chooses $100 to be received today. The person is given another choice, between $100 to be received in a year from now and $120 to be received in a year and 2 months from now. The person chooses chooses the latter option. This behaviour is inconsistent with exponential discounting and constitutes
a. over-discounting
b. present discounting
c. a preference reversal
d. future discounting
2. Suppose Mary goes ahead and gets a loan for $1,500 from Brimble. She incurs an establishment fee of 20% of the loan amount and a monthly loan fee of 4% per month. She aims to repay the loan over 4 weeks. Compute how much she would have to repay, in percent of the initial loan amount (rounded to the nearest percent).
a.
a. 124
b. 120
c. 20
d. 24
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