Time value of money indicates that
Financial Analysis & Decision Making - Quiz 1

Quiz
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Other
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University
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Hard
Abhishek Jain
Used 4+ times
FREE Resource
20 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A unit of money obtained today is worth more than a unit of money obtained in future
A unit of money obtained today is worth less 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
Time value of money supports the comparison of cash flows recorded at different time period by
Discounting all cash flows to a common point of time
Compounding all cash flows to a common point of time
Using either (a) or (b)
None of the above
3.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
If the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be:
10% per annum
10.10 per annum
10.25%per annum
10.38% per annum
4.
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
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Mr. X takes a loan of Rs 50,000 from HDFC Bank. The rate of interest is 10% per annum. The first installment will be paid at the end of year 5. Determine the amount of equal annual installments if Mr. X wishes to repay the amount in five installments.
Rs 19500
Rs 19400
Rs 19310
None of the above
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Present value tables for annuity cannot be straight away applied to varied stream of cash flows.
True
False
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
To find the present value of a sum of Rs. 10,000 to be received at the end of each year for the next 5 years at 10% rate, we use:
Present value of a single cash flow table
Present value of annuity table.
Future value of a single cash flow table
Future value of annuity table
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