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MGT201 Financial Management Graded Discussion Board (GDB) NO.1 Solution and Discussion Fall 2013 Due Date: November 22, 2013

Topic for Discussion: “Present Value and Discounting?”

GDB Question:

Few days ago, the State Bank of Pakistan (SBP) has raised interest rate up to 9.5 percent from 9.0 percent, in line with requirements set by the International Monetary Fund. This increase was in a need to curtail rising inflation by tightening the flow of liquidity through higher interest rate. You were planning to purchase an insurance policy. What will be the effect of this rise in interest rate on:

a)        Present value of insurance policy

b)       Future value of insurance policy

Important Instructions:

  • Your discussion comments must be based on logical facts.
  • Your comments should be brief and to-the-pointAvoid unnecessary details.
  • Your discussion should not exceed 120 words
  • The GDB will open and close on above specified date and time. Please note that no grace day or extra time will be given for posting comments on GDB.
  • Use the font style “Times New Roman” and font size “12”.
  • Your answer should be relevant to the topic i.e. clear and concise.
  • Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  • Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
  • You must post your answer on the Graded Discussion Board (GDB), not on the Moderated Discussion Board (MDB). Both will run parallel to each other during the time specified above. Therefore, due care will be needed.
  • Obnoxious or ignoble answer should be strictly avoided.
  • You cannot participate in the discussion after the due date via email.
  • Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.

Views: 5326

Replies to This Discussion


assalam o alikum 

yar kisi ka pas koyae solution nahio ha kay?

oye phalay ya to clear karaye koye muje k GDB text mn submint karna hai ya asy math formate mn ??? :( :( 

math format ma kaskaro ga 

i think to solve present value we have to use periodic inteerest rate formula

i per= (i nominal interest rate)/m

where m= 1

so m is same in both cases

then in both cases present and future value will be increased

Help Pls??

A.o.a have any idea About first BDG help me 

No idea sir g.......................

i am sooooooooooooooooooooooooo confuse about GDB


Plz help out in GDB solution...

plzzzzzzzzzzzzzzzzzzz koi to help kr do :(

please help me in gdb me confuse ............................

When the interest rate increase present value of the policy will be decreased and future value will be increased.

The reason is when the interest rate is high we can get more profit in future by investing less today.


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