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