Which of the following will increase the future value of a lump sum amount to be received in 15 years?
a. A decrease in the present value
b. Changing to simple interest from compound interest
c. An increase in the interest rate
d. A decrease in the future value
e. A decrease in the i...
FINC 3131 Final Exam || A Verified A+ Pass.
Which of the following will increase the future value of a lump sum amount to be received in 15
years?
a. A decrease in the present value
b. Changing to simple interest from compound interest
c. An increase in the interest rate
d. A decrease in the future value
e. A decrease in the interest rate correct answers C
The present value of a lump sum future amount:
a. Is directly related to the interest rate
b. Decreases as the time period increases
c. Is inversely related to the future value
d. Decreases as the interest rate decreases
e. Is directly related to the time period correct answers B
Given an interest rate of zero percent (i.e. positive), the future value of a lump sum invested
today will always be:
a. Increase if the investment time period is shortened
b. Remain constant, regardless of the investment time period
c. Decrease if the investment time period lengthened
d. Be equal to $0
e. Be higher than its present value correct answers E
Janet just won a scholarship that will pay her $500 a month, starting today, and continuing for
the next 48 months. Which one of the following terms best describes these scholarship
payments?
a. Ordinary perpetuity
,b. Annuity Due
c. Amortized loan
d. Perpetuity due
e. Ordinary annuity correct answers B
Jonathan pays .85 interest monthly on his credit card account. When the interest rate on that debt
is expressed as if it were compounded annually, the rate would be referred to as the:
a. Annual percentage rate
b. Quoted rate
c. Stated rate
d. Effective annual rate
e. Simplified rate correct answers D
Which one of these is a perpetuity?
a. Trust income of $1200 a year forever
b. Rental payment of $800 a month for one year
c. Lottery winnings of $1000 a month for life
d. Retirement pay of $2200 a month for 20 years
e. Car payment of $260 a month for 60 months correct answers A
Which one of the following features distinguishes an ordinary annuity from an annuity due?
a. Annuity interest rate
b. Amount of each payment
c. Frequency of the payments
d. Timing of the annuity payments
e. Number of equal payments correct answers D
What is the principal amount of a bond that is repaid at the end of the loan term called?
, a. Maturity price
b. Face Value
c. Current price
d. Market price
e. Coupon correct answers B
When a bond's yield to maturity is less than the bond's coupon rate, the bond:
a. Had to be recently issued
b. Is selling at a premium
c. Has reached its maturity date
d. Is priced at par
e. Is selling at a discount correct answers B
The market-required rate of return on a bond that is held for its entire life is called the:
a. Coupon rate
b. Current yield
c. Yield to maturity
d. Call premium
e. Call provision correct answers C
Newly invested securities are sold to investors in which on of the following markets?
a. Inside
b. Proxy
c. Primary
d. Secondary
e. Stated value correct answers C
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