Time value of money indicates that

Time Value of Money

Quiz
•
Mathematics
•
University
•
Easy
Ananya Balehithlu
Used 1+ times
FREE Resource
8 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A unit of money obtained today is worth less than a unit of money obtained in future
A unit of money obtained today is worth more than a unit of money obtained in future
There is no difference in the value of money obtained today and tomorrow
None of the above
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Select the false statement
Annuity due is the series of equal cash flows that occur at the end of the period
Ordinary annuity is the series of equal cash flows that occur at the end of the period
Perpetuity is the annuity that lasts forever
The reverse of compounding is discounting
3.
MULTIPLE SELECT QUESTION
45 sec • 1 pt
Time value of money is important in finance because it’s analysis is used to: (Select all that apply)
value the stocks, bonds and capital budgeting projects
plan for retirements
set up loan payment schedules
make more informed decisions about an investor’s money
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Finding the FV of cash flows is:
Exponenting
Compounding
Discounting
Incrementing
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is perpetuity in finance?
Annuity that last forever
Debt that lasts forever
Debts paid by perpetrators
None of the above
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Effective annual interest rate is the
The annual rate of interest that ignores compounding effects
The annual rate of interest actually being earned, accounting for compounding.
Amount of interest charged each period
None of the above
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Relationship between annual nominal rate of interest and annual effective rate of interest, if frequency of compounding is greater than one:
Effective rate = Nominal rate
Effective rate = Nominal rate
Effective rate > Nominal rate
None of the above
8.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the FV of $150 after 4 years under 8% quarterly compounding?
150(1.08)^(4x4)
4 x (150(1.08)^4)
150(1.02)^4
150(1.02)^(4x4)
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