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Question 2 0 out of 2 points the present value of a

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Question 2 0 out of 2 points
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The present value of a $20,000 perpetuity at a 7 percent discount rate is Answer Selected Answer: Given] Correct Answer: $285,714. Question 3 0 out of 2 points When the amount earned on a deposit has become part of the principal at the end of a specified time period the concept is called Answer Selected Answer: Given] Correct Answer: compound interest. Question 4 0 out of 2 points Which of the following terms best describes an annuity due? Answer Selected Answer: Correct
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Answer: payment at beginning of year Question 5 0 out of 2 points If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent, the differential compounding rate would be ________ percent Answer Selected Answer: Given] Correct Answer: five Question 6 0 out of 2 points Interest earned only on an investment’s principal or original amount is referred to as: Answer Selected Answer: Given] Correct Answer: simple interest Question 7 0 out of 2 points
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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? Answer Selected Answer: Given] Correct Answer: $258 Question 8 0 out of 2 points If the interest rate is zero, the future value interest factor equals ________. Answer Selected Answer: Given] Correct Answer: 1.0 Question 9 0 out of 2 points The interest rate that measures the true interest rate when compounding occurs more frequently than once a year is called the: Answer
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Selected Answer: Correct Answer: effective annual rate Question 10 0 out of 2 points Suppose you have a choice of two equally risky annuities, each paying $1,000 per year for 20 years. One is an annuity due, while the other is an ordinary annuity. Which annuity would you choose? Answer Selected Answer: Given] Correct Answer: the annuity due
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