Session:7 Time Value of Money I: Single Payment Value
Multiple Choice
Principles of Finance | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance
1. The most basic type of financial transaction involves _______________.
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an amount of money that is not invested
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a series of equal installment amounts paid or received over a period of time
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a simple, one-time amount of cash that can be either a receipt or a payment
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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 _______________.
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be less than the present value
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be equal to the present value
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be greater than the present value
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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?
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Increase
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Decrease
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Remain the same
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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 _______________.
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4.7%
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6.5%
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7.7%
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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 _______________.
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increase
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remain the same
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decrease
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None of the above