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Finance 301 Final Exam Questions and Correct Answers Latest Update 2024 Already Passed

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Finance 301 Final Exam Questions and Correct Answers Latest Update 2024 Already Passed The Jones Brothers recently established a trust fund that will provide annual scholarships of $12,000 indefinitely. These annual scholarships are: 1) _______ A) amortized payments. B) an ordinary ann...

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  • November 15, 2024
  • 93
  • 2024/2025
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Finance 301 Final Exam Questions and Correct Answers Latest Update 2024 Already Passed

The Jones Brothers recently established a trust fund that will provide annual scholarships of $12,000
indefinitely. These annual scholarships are:

1)

_______

A)

amortized payments.

B)

an ordinary annuity.

C)

a perpetuity.

D)

a perpetuity due.

E)

an annuity due. - Answers a perpetuity.

Lee pays 1 percent per month interest on his credit card account. When his monthly rate is multiplied by
12, the resulting answer is referred to as the:



2)

_______

A)

effective annual rate.

B)

compounded rate.

C)

simple rate.

,D)

annual percentage rate.

E)

perpetual rate. - Answers annual percentage rate

All else held constant, the present value of an annuity will decrease if you:



3)

_______

A)

increase the time period.

B)

decrease the annuity payment.

C)

increase the payment amount.

D)

increase the annuity's future value.

E)

decrease the discount rate. - Answers decrease the annuity payment

Which statement is true?



4)

_______

A)

All else equal, an increase in the number of annuity payments decreases the present value and increases
the future value of an annuity.

B)

,All else equal, an ordinary annuity is more valuable than an annuity due.

C)

All else equal, a decrease in the number of payments increases the future value of an annuity due.

D)

An annuity with payments at the beginning of each period is called an ordinary annuity.

E)

All else equal, an increase in the discount rate decreases the present value and increases the future
value of an annuity. - Answers All else equal, an increase in the discount rate decreases the present
value and increases the future value of an annuity

Which one of these is a perpetuity?



5)

_______

A)

Car payment of $260 a month for 60 months

B)

Rental payment of $800 a month for one year

C)

Trust income of $1,200 a year forever

D)

Lottery winnings of $1,000 a month for life

E)

Retirement pay of $2,200 a month for 20 years - Answers Trust income of $1,200 a year forever

Which one of the following can be classified as an annuity but not as a perpetuity?



6)

, _______

A)

Equal annual payments for life

B)

Increasing quarterly payments for six years

C)

Unequal payments each year for nine years

D)

Increasing monthly payments forever

E)

Equal weekly payments forever - Answers Equal annual payments for life

Assume all else is equal. When comparing savings accounts, you should select the account that has the:



7)



_______

A)

highest stated rate.

B)

lowest annual percentage rate.

C)

lowest effective annual rate.

D)

highest effective annual rate.

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