Answer these questions please:
1. A summary measure of an investment's projected performance besed on the
possible rates of return and the likelihood of those rates of return occurring is called the:
a. Inflation-adjusted rate of return.
b. Relative rate of return.
c. Expected rate of return.
d. Risk-free rate of return.
2. When calculating the present or future value of an annuity, we assume that:
a The number of cohpoundings depends on the size of the payment.
b. The number of compoundings per year is equal to the number of payments per
year.
c. The number of compoundings each year is independent of the pavments per
year.
d. The number of compoundings depends on the annual interest rate.
3. If you are borrowing money, which of the following would you prefer?
a Interest compounded annually.
b. Interest compounded quarterly.
c. Simple interest.
d. Interest compounded monthly.
4. If the interest rate increases, the present value of an ordinary annuity:
a. Increases
b. Decreases.
c. Remains unchanged
d. Not determinable without additional information.
5. The difference between the present value
and future value of an amount is:
a. Income.
b. Premium.
c. Interest.
d. An annuity.
