7.9: Multiple Choice
- Page ID
- 94634
\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \) \( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)\(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\) \(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\)\(\newcommand{\AA}{\unicode[.8,0]{x212B}}\)
1.
The most basic type of financial transaction involves _______________.
-
an amount of money that is not invested
-
a series of equal installment amounts paid or received over a period of time
-
a simple, one-time amount of cash that can be either a receipt or a payment
-
None of the above
2.
If a discount (or interest) rate has a positive value, then the future value of any amount deposited in an interest-bearing account will _______________.
-
be less than the present value
-
be equal to the present value
-
be greater than the present value
-
decline over time
3.
If the discount (or interest) rate used to calculate the present value of a future payment increases, the calculated present value will do which of the following?
-
Increase
-
Decrease
-
Remain the same
-
Increase as the period of time shortens
4.
The discount rate that is required to equate a future payment of $500 in three years to a present value of $400 is _______________.
-
4.7%
-
6.5%
-
7.7%
-
8.8%
5.
If compounding periods increase in frequency and all else remains the same, the dollar values of any resulting future value calculations will _______________.
-
increase
-
remain the same
-
decrease
-
None of the above