question archive Which of the following statements is NOT TRUE? Statement 1
Which of the following statements is NOT TRUE? Statement 1
Subject:AccountingPrice: Bought3
Which of the following statements is NOT TRUE? Statement 1. The present value of a future sum decreases as the number of periods per year increases, other things held constant. Statement 2. The present value of a future sum decreases as the discount rate increases, other things held constant. Statement 3. All other things held constant, the present value of a given annual annuity decreases as the number of periods per year increases. *
1 point
All of the statements are true.
Statement 1 only.
Statement 2 only.
All of the statements are not true.
Statement 3 only.
Which of the following statements is CORRECT? *
1 point
If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.
If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
The cash flows for an annuity due must all occur at the ends of the periods.
The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
Which of the following statements is CORRECT? *
1 point
The cash flows for an annuity due must all occur at the beginning of the periods.
If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
If some cash flows occur at the beginning of the periods while others occur at the end of the periods, then we have what the textbook defines as a variable annuity.
The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year or once a month.
The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
At the end of 10 years, which of the following investments would have the highest future value? Assume that the effective annual rate for all investments is the same and is greater than zero. *
1 point
Investment E pays P250 at the end of every year for the next 10 years (a total of 10 payments).
Investment A pays P250 at the beginning of every year for the next 10 years (a total of 10 payments).
Investment C pays P125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
Investment B pays P125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
Investment D pays P2,500 at the end of 10 years (just one payment).
Which of the following statements is CORRECT? *
1 point
The future value of an annuity table is most useful in the short-cut calculation of the future value of uneven cash flows.
The present value of an annuity table is most useful in the short-cut calculation of the present value of uneven cash flows.
The formula or equation for the calculation of the present value can be used only in even cash flows that are paid or received at regular time intervals and subject to a constant discount rate.
The formula or equation for the calculation of the future value can be used also in regular annuity and subject to a fluctuating rate of return.
Which of the following statements is TRUE? Statement 1. As you increase the interest rate, the future value of an investment increases. Statement 2. As you increase the length of the investment (to receive some lump sum), the present value of the investment increases. Statement 3. The present value of an ordinary annuity is larger than the present value of an annuity due (all else equal). *
1 point
Statement 3 only.
Statement 1 only.
Statement 2 only.
None of the statement is true.
All of the statements are true.
Under what conditions must a distinction be made between money to be received today and money to be received in the future? *
1 point
When there is no risk of nonpayment in the future.
When current interest rates are different from expected future rates.
A period of recession.
When idle money can earn a positive return.
*
1 point
=1.06 x 1.06 x 1.06 x 1.06 x 1.06
=1÷1.06÷1.06÷1.06÷1.06÷1.06
=1 ÷(1.06 x 1.06 x 1.06 x 1.06 x 1.06)
=1.06÷1.06÷1.06÷1.06÷1.06
Which of the following statements is NOT TRUE? *
1 point
In an annuity due, payments occur at the beginning of the period.
In an ordinary annuity, payments occur at the beginning of the period.
The present value of a perpetuity can be calculated.
A perpetuity will never mature at any point in future.
If the rate of interest that your investment can earn on a 2-year investment is zero, which of the following statements is NOT CORRECT? *
1 point
The future value of your investment is higher than your present value at the end of the investment period.
All of the statements are correct.
The payment for the use of your money for two years is zero.
You will receive the same amount you invested at the beginning of the 2-year period at the conclusion or maturity of the investment.
Which investment will you choose from the following investment opportunities: *
1 point
All the choices will provide the same future value.
A one-year investment that pays 12%, compounding quarterly.
A one-year investment that pays 12%, compounding monthly.
A one-year investment that pays 12%, compounding annually.
The amount that someone is willing to pay today, for a single cash flow in the future is *
1 point
The future value of the stream of cash flows.
The present value of the annuity of cash flows
The future value of the cash flow.
The present value of the cash flow.
Cash flows are not automatically considered as annuities due to their following characteristics, EXCEPT *
1 point
The cash flows may be received or paid intermittently.
The cash flows are payments or receipts at future period of time.
The cash flows may be inflows and outflows all together at a common interval over the life of the receipts and payments.
The cash flows may be of uneven amounts.
If you hold the annual percentage rate constant while increasing the number of compounding periods per year, then *
1 point
None of the choices.
The effective interest rate will not change.
The effective interest rate will increase.
The effective interest rate will decrease.
