Fin 534 Week 5 Midterm Exam Part 2 – New

FIN 534 Week 5 Midterm Exam Part 2 – NEW

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FIN 534 Week 5 Midterm Exam Part 2 – NEW
TRUE/FALSE

Starting to invest early for retirement increases the benefits of compound interest.

Starting to invest early for retirement reduces the benefits of compound interest.

A time line is meaningful even if all cash flows do not occur annually.

A time line is not meaningful unless all cash flows occur annually.

Time lines can be constructed in situations where some of the cash flows occur annually but others occur quarterly.

Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.

Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.

Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods.

Some of the cash flows shown on a time line can be in the form of annuity payments while others can be uneven amounts.

Some of the cash flows shown on a time line can be in the form of annuity payments but none can be uneven amounts.

If the discount (or interest) rate is positive, the present value of an expected series of payments will always exceed the future value of the same series.

If the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the present value of the same series.

Disregarding risk, if money has time value, it is impossible for the present value of a given sum to exceed its future value.

Disregarding risk, if money has time value, it is impossible for the future value of a given sum to exceed its present value.

If a bank compounds savings accounts quarterly, the nominal rate will exceed the effective annual rate.

If a bank compounds savings...