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CF Quiz 1 Ch 06 Key
11. An ordinary annuity is best defined by which one of the following?
A.
increasing payments paid for a definitive period of time
B.
increasing payments paid forever
C.
equal payments paid at regular intervals over a stated time period
D.
equal payments paid at regular intervals of time on an ongoing basis
E.
unequal payments that occur at set intervals for a limited period of time
Refer to section 6.2
211. Which one of the following compounding periods will yield the smallest present value given a stated future value
and annual percentage rate?
A.
annual
B.
semiannual
C.
monthly
D.
daily
E.
continuous
Refer to section 6.3
31. Your grandmother is gifting you $100 a month for four years while you attend college to earn your bachelor's degree.
At a 5.5 percent discount rate, what are these payments worth to you on the day you enter college?
A.
$4,201.16
B.
$4,299.88
C.
$4,509.19
D.
$4,608.87
E.
$4,800.00
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46. The Design Team just decided to save $1,500 a month for the next 5 years as a safety net for recessionary periods.
The money will be set aside in a separate savings account which pays 4.5 percent interest compounded monthly. The first
deposit will be made today. What would today's deposit amount have to be if the firm opted for one lump sum deposit
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 Fall '11
 Linney
 Finance, Annuity

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