You are watching: Which one of the following statements related to annuities and perpetuities is correct?
2. Which one of the following accurately specifies a perpetuity? A. A minimal number of equal payments paid in also time increments.B. Payments of equal amounts that are paid irregularly however indefinitely.C. Varying amounts that room paid at also intervals forever.D. Unending same payments paid at same time intervals.E. Unending same payments payment at either same or unlike time intervals.
A Canadian consol is ideal categorized as: A. An plain annuity.B. An amortized cash flow.C. An annuity due.D. A discounted loan.E. A perpetuity.
The interest rate that is most generally quoted through a lender is referred to as which among the following? A. Yearly percentage rate.B. Link rate.C. Effective yearly rate.D. Simple rate.E. Common rate.
5. An interest rate on a loan that is compounded monthly however expressed together an annual rate would be an instance of which one of the following rates? A. Stated rate.B. Discounted yearly rate.C. Effective annual rate.D. Regular monthly rate.E. Consolidated monthly rate.
Your credit card charges friend 1.5 percent attention per month. This rate once multiplied by 12 is dubbed the: A. Effective annual rate.B. Annual percentage rate.C. Periodic interest rate.D. Compound attention rate.E. Period interest rate.
7. A loan where the borrower obtain money today and repays a solitary lump sum on a future day is referred to as a(n) _____ loan. A. Amortized.B. Continuous.C. Balloon.D. Pure discount.E. Interest-only.
Which one of the complying with terms is supplied to explain a loan that calls for routine interest payments and also a lump sum major payment? A. Amortized loan.B. Modified loan.C. Balloon loan.D. Pure discount loan.E. Interest-only loan.
Amortized loans must have actually which one of these characteristics? A. Either same or unequal primary payments over the life that the loan.B. One lump-sum primary payment.C. Boosting payments over the life the the loan.D. Equal attention payments over the life the the loan.E. Declining periodic payments.
Which among the complying with terms is defined as a loan within the constant payments, including both interest and also principal amounts, are poor to pensioner the whole loan amount, i beg your pardon then need to be repaid in one bump sum? A. Amortized loan.B. Continuing loan.C. Balloon loan.D. Pure discount loan.E. Interest-only loan.
You space comparing two annuities that market quarterly payments of $2,500 for 5 years and pay .75 percent interest per month. You will certainly purchase one of these this particular day with a single lump sum payment. Annuity A will certainly pay friend monthly, beginning today, while annuity B will certainly pay monthly, beginning one month native today. Which one of the complying with statements is correct worrying these two annuities? A. These annuities have actually equal present values but unequal future values.B. These 2 annuities have actually both same present and also future values.C. Annuity B is one annuity due.D. Annuity A has actually a smaller sized future value than annuity BE. Annuity B has a smaller present value than annuity A
You space comparing 2 investment options that every pay 6 percent interest, compounded annually. Both alternatives will provide you through $12,000 of income. Option A pays $2,000 the an initial year complied with by two annual payments the $5,000 each. Alternative B payment three yearly payments of $4,000 each. Which one of the complying with statements is correct offered these two investment options? i think a optimistic discount rate. A. Both choices are of equal value since they both provide $12,000 the income.B. Alternative A has actually the higher future worth at the finish of year three.C. Alternative B has actually a greater present value at time zero.D. Choice B is a perpetuity.E. Choice A is an annuity.
You room considering two tasks with the following cash flows: project X project YYear 1 $8,500 $7,000Year 2 8,000 7,500Year 3 7,500 8,000Year 4 7,000 8,500Which one of the adhering to statements is true concerning these two projects provided a hopeful discount rate? A. Both projects have actually the very same future worth at the finish of Year 4.B. Both projects have actually the same value in ~ Time 0.C. Both tasks are ordinary annuities.D. Project Y has a higher present worth than task X.E. Job X has actually both a higher present and also a greater future value than task Y.
Which one of the adhering to statements is correct provided the following two sets of task cash flows? i think a hopeful discount rate. Job A job BYear 1 $4,000 $2,000Year 2 3,000 3,000Year 3 0 2,000Year 4 3,000 3,000 A. The cash flows for task B are an annuity, yet those of project A space not.B. Both to adjust of cash flows have equal current values as of time zero.C. The current value in ~ time zero the the final cash circulation for task A will be discounted making use of an exponent of three.D. Both projects have actually equal worths at any allude in time since they both pay the same amount in total.E. Task B is worth much less today than job A.
Which among the following statements pertained to annuities and perpetuities is correct? A. An plain annuity is worth much more than an annuity due given equal yearly cash flows because that 10 year at 7 percent interest, compounded annually.B. A perpetuity composed of $100 monthly payments is worth an ext than one annuity the $100 monthly payments offered equal discount rates.C. Many loans are a type of a perpetuity.D. The current value the a perpetuity can not be computed but the future worth can.E. Perpetuities room finite but annuities room not.
A perpetuity written of 100 month payments is worth more than one annuity that 100 monthly payment given amounts to discount rates
Which among the complying with statements concerned loan interest rates is correct? A. The annual percentage price considers the compounding of interest.B. When comparing loan you must compare the effective annual rates.C. Lenders are most apt to quote the effective yearly rate.D. Regardless of the compounding period, the effective annual rate will constantly be greater than the yearly percentage rate.E. The much more frequent the compounding period, the reduced the effective annual rate offered a fixed yearly percentage rate.
Which among the following statements concerning interest prices is correct? A. Savers would prefer yearly compounding over monthly compounding offered the same annual percentage rate.B. The effective yearly rate decreases as the variety of compounding durations per year increases.C. The effective yearly rate equates to the annual percentage rate once interest is compounded annually.D. Borrowers would favor monthly absorption over annual compounding offered the same yearly percentage rate.E. For any positive price of interest, the annual percentage price will always exceed the effective annual rate.
Which one of these statements connected to cultivation annuities and perpetuities is correct? A. You can compute the current value the a farming annuity however not a farming perpetuity.B. In computing the current value that a farming annuity, friend discount the cash flows making use of the expansion rate together the discount rate.C. The future worth of an annuity will certainly decrease if the expansion rate is increased.D. Rise in the price of growth will decrease the present value of one annuity.E. The present value the a farming perpetuity will decrease if the discount price is increased.
Which one of the adhering to statements correctly defines a time value of money relationship? A. Time and also future values are inversely related, every else held constant.B. Attention rates and time space positively related, every else held constant.C. Rise in a positive discount rate rises the current value.D. Rise in time boosts the future value offered a zero rate of interest.E. Time and present value are inversely related, all else held constant.
Which among the following compounding durations will productivity the shortest effective yearly rate provided a declared future value at year 5 and an annual percentage price of 10 percent? A. Annual.B. Semiannual.C. Monthly.D. Daily.E. Continuous.
The whole repayment the which among the complying with loans is computed merely by computing one solitary future value? A. Interest-only loanB. Balloon loan.C. Amortized loan.D. Pure discount loan.E. Cartridge loan.
How is the primary amount of an interest-only loan repaid? A. The principal is forgiven over the loan period; for this reason it walk not need to be repaid.B. The major is repaid in to decrease increments and also included in every loan payment.C. The major is repaid in one lump sum at the end of the loan period.D. The major is repaid in equal yearly payments.E. The principal is repaid in raising increments through continual monthly payments.
An amortized loan: A. Needs the primary amount to be repaid in also increments over the life that the loan.B. May have actually equal or increasing amounts applied come the primary from every loan payment.C. Needs that all interest be repaid top top a monthly basis while the primary is repaid in ~ the end of the loan term.D. Requires that every payments be same in amount and include both principal and also interest.E. Repays both the principal and the attention in one lump sum at the end of the loan term.
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You need $25,000 today and also have made decision to take out a loan at 7 percent for 5 years. Which among the adhering to loans would be the least expensive? Assume all loans call for monthly payments and also that interest is compounded ~ above a monthly basis.A. Interest-only loan.B. Amortized loan through equal major payments.C. Amortized loan v equal loan payments.D. Discount loan.E. Balloon loan whereby 50 percent of the principal is repaid together a balloon payment.