Question 1

Because interest compounds,the annual percentage rate formula will overstate the true interest cost.

Accepted Answer

A) True 
 B)False

Question 2

As the number of periods increases,present value increases.

Accepted Answer

A) True 
 B)False

Question 3

You put $2,000 in an IRA account at Northern Trust.This account pays a fixed interest rate of 8% compounded quarterly.How much money do you have in five years?

Accepted Answer

A) $2,914 
B) $2,938 
C) $2,972 
D) $2,999 
A) $2,914 
B) $2,938 
C) $2,972 
D) $2,999

Question 4

With compound interest,interest is earned only on the investment's principal.

Accepted Answer

A) True 
 B)False

Question 5

When compounding more than once a year,the true opportunity costs measure of the interest rate is indicated by the:

Accepted Answer

A) annual percentage rate 
B) contract rate 
C) stated rate 
D) effective annual rate 
A) annual percentage rate 
B) contract rate 
C) stated rate 
D) effective annual rate

Question 6

An investment will mature in 20 years.Its maturity value is $1,000.If the discount rate is 7%,what is the present value of the investment?

Accepted Answer

A) $178 
B) $258 
C) $276 
D) $362 
A) $178 
B) $258 
C) $276 
D) $362

Question 7

An amortized loan is repaid in equal payments over a specified time period.

Accepted Answer

A) True 
 B)False

Question 8

The future value of a dollar ________ as the interest rate increases and ________ the farther in the future an initial deposit is to be received.

Accepted Answer

A) decreases;decreases. 
B) decreases;increases. 
C) increases;increases. 
D) increases;decreases. 
A) decreases;decreases. 
B) decreases;increases. 
C) increases;increases. 
D) increases;decreases.

Question 9

The future value of $100 received today and deposited at 6 percent for four years is

Accepted Answer

A) $126. 
B) $ 79. 
C) $124. 
D) $116. 
A) $126. 
B) $ 79. 
C) $124. 
D) $116.

Question 10

If the compound inflation rate were greater than the compound interest rate,purchasing power would fall.

Accepted Answer

A) True 
 B)False

Because interest compounds,the annual percentage rate formula will overstate the true interest cost.

As the number of periods increases,present value increases.

You put $2,000 in an IRA account at Northern Trust.This account pays a fixed interest rate of 8% compounded quarterly.How much money do you have in five years?

With compound interest,interest is earned only on the investment's principal.

When compounding more than once a year,the true opportunity costs measure of the interest rate is indicated by the:

An investment will mature in 20 years.Its maturity value is $1,000.If the discount rate is 7%,what is the present value of the investment?

An amortized loan is repaid in equal payments over a specified time period.

The future value of a dollar as the interest rate increases and the farther in the future an initial deposit is to be received.

The future value of $100 received today and deposited at 6 percent for four years is

If the compound inflation rate were greater than the compound interest rate,purchasing power would fall.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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Exam 9: Time Value of Money

Because interest compounds,the annual percentage rate formula will overstate the true interest cost.

As the number of periods increases,present value increases.

You put $2,000 in an IRA account at Northern Trust.This account pays a fixed interest rate of 8% compounded quarterly.How much money do you have in five years?

With compound interest,interest is earned only on the investment's principal.

When compounding more than once a year,the true opportunity costs measure of the interest rate is indicated by the:

An investment will mature in 20 years.Its maturity value is $1,000.If the discount rate is 7%,what is the present value of the investment?

An amortized loan is repaid in equal payments over a specified time period.

The future value of a dollar ________ as the interest rate increases and ________ the farther in the future an initial deposit is to be received.

The future value of $100 received today and deposited at 6 percent for four years is

If the compound inflation rate were greater than the compound interest rate,purchasing power would fall.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

The future value of a dollar as the interest rate increases and the farther in the future an initial deposit is to be received.