Question 1

It is a type of perpetuity in which payment is made at the beginning of the payment interval.

Accepted Answer

Perpetuity due

Answer

Delayed perpetuity

Answer

Ordinary perpetuity

Answer

Deferred perpetuity

Question 2

It is an annuity which is for a lifetime.

Accepted Answer

Perpetuity

Answer

Annuity

Answer

bonds

Answer

depreciation

Question 3

Which factor is NOT needed in solving the periodic payment of Perpetuity.

Accepted Answer

time

Answer

rate

Answer

Present Value

Answer

compounding period

Question 4

It is the final amount at which the bond will be paid on the redemption date.

Accepted Answer

redemption value

Answer

rate

Answer

current yield

Answer

depreciation charges

Question 5

It is a debt security issued by a corporation and sold to investors.

Accepted Answer

Corporate bond

Answer

Government bond

Answer

Depreciation

Answer

Ionic bond

Question 6

It can be found by dividing the annual interest by the purchase price of the bond.

Accepted Answer

current yield

Answer

depreciation

Answer

bond

Answer

redemption value

Question 7

It is the difference between cost and scrap value.

Accepted Answer

wearing value

Answer

salvage value

Answer

residual value

Answer

periodic depreciation charges

Question 8

It refers to the decrease in the value of a property due to the gradual extraction of its contents.

Accepted Answer

depletion

Answer

deflation

Answer

physical depreciation

Answer

functional depreciation

Question 9

It spreads depreciation evenly over the useful life of the property.

Accepted Answer

straight-line method

Answer

sum of the years method

Answer

none of the choices

Answer

fixed percent method

Question 10

Which tells the similarity between ordinary annuity and ordinary perpetuity?

Accepted Answer

They are both annuity.

Answer

They have future value.

Answer

They are both for a lifetime.

Answer

They have the same value.

Question 11

Which is TRUE about the present value of ordinary perpetuity and perpetuity due?

Accepted Answer

Ordinary Perpetuity < Perpetuity due

Answer

Ordinary perpetuity =Perpetuity due

Answer

Ordinary Perpetuity > Perpetuity due

Answer

Ordinary Perpetuity = ½(Perpetuity due)

Question 12

Which is TRUE about bonds?

Accepted Answer

Owners of the bond are debt holders or creditors.

Answer

Owners of the bond are investors.

Answer

Bond is not a debt security.

Answer

Bond can neither be issued by government nor company.

Question 13

Which is TRUE about government and corporate bond?

Accepted Answer

Corporate bond has a higher default risks ( the risk that a lender takes on in the chance that a borrower will be unable to make the required payments on their debt obligation).

Answer

Government bond has a higher default risks ( the risk that a lender takes on in the chance that a borrower will be unable to make the required payments on their debt obligation).

Answer

Government bonds are issued by a corporation.

Answer

Corporate bonds are issued by the government officials.

Question 14

Which is NOT an example of a depreciated asset?

Accepted Answer

Antiques

Answer

Car

Answer

Equipment

Answer

Machine

Question 15

Which is NOT a type of depreciation?

Accepted Answer

Deflation

Answer

Physical

Answer

Functional

Answer

Depletion

Question 16

How much will be the price of a bond whose face value isPhp250, 000 and whose redemption rate is 60%?

Formula: $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

150,000

Answer

50,000

Answer

100,000

Answer

15,000

Question 17

It is a type of perpetuity in which payment is made at the end of the payment interval.

Accepted Answer

Ordinary perpetuity

Answer

none of the choices

Answer

Perpetuity due

Answer

Deferred perpetuity

Question 18

Find the present value of ordinary perpetuity of 125,000, payable at the end of each year if money is worth 5% compounded annually.

Formula: $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

2,500,000

Answer

25,000

Answer

250,000

Answer

2,500

Question 19

You own an equipment which was purchased at a total cost of Php5, 100, 000 with an estimated life of 5 years. The residual value after 5 years is estimated to be Php100, 000. You are planning to buy new equipment, so in order to lessen the cost of the new machine; you need to sell the old one.

What is the wearing value (W) in the given scenario?

Formula: W = C - S

What is the wearing value (W) in the given scenario?

Formula: W = C - S

Accepted Answer

5,000,000

Answer

5,200,000

Answer

5,100,000

Answer

100,000

Question 20

You own an equipment which was purchased at a total cost of Php5, 100, 000 with an estimated life of 5 years. The residual value after 5 years is estimated to be Php100, 000. You are planning to buy new equipment, so in order to lessen the cost of the new machine; you need to sell the old one.

What is the wearing value (W) in the given scenario?

Formula: W = C - S

What is the periodic depreciation charges (R) in the given scenario?

Formula: $R\ =\ \frac{W}{n}$ or $R\ =\ \frac{C-S}{n}$

Accepted Answer

1,000,000

Answer

5,000,000

Answer

5,100,000

Answer

100,000

Question 21

What is the monthly payment of ordinary perpetuity if Php210,000 payable at 10% compounded monthly?

FORMULA: $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

1,750

Answer

1,750,000

Answer

17,500

Answer

175,000

Question 22

What is the present value of perpetuity due, if Php12, 000 is payable at 3% compounded quarterly?

Formula: $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

1,612,000

Answer

16,120

Answer

16,112,000

Answer

161,200

Question 23

How much will be the price of a bond whose face value is Php150, 000 and whose redemption rate is 90%?

Formula : $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

135,000

Answer

1,350

Answer

1,350,000

Answer

13,500

Question 24

What is the quarterly payment of ordinary perpetuity if Php50, 000 payable at 6% compounded quarterly?

FORMULA: $V=\ face\ value\ imes\ redemption\ rate\ \left(in\ decimal
ight)$

Accepted Answer

750

Answer

750,000

Answer

7,500

Answer

75,000

Question 25

Which is TRUE about Fixed Percent Method?

Accepted Answer

The natural rate of depreciation is doubled and is applied to the declining book value.

Answer

It creates a bigger depreciation charges at the early years of the asset as compared to the later years.

Answer

It is the simplest method of allowing for depreciation.

Answer

It assumes that the asset loses its usefulness faster in early periods.

Question 26

Which is TRUE about Straight-line Method?

Accepted Answer

It is the simplest method of allowing for depreciation.

Answer

The natural rate of depreciation is doubled and is applied to the declining book value.

Answer

It creates a bigger depreciation charges at the early years of the asset as compared to the later years.

Answer

It assumes that the asset loses its usefulness faster in early periods.

Question 27

Perpetuity is also called ____________.

Accepted Answer

Perpetual annuity

Answer

Deferred annuity

Answer

Delayed annuity

Answer

Annuity due

Question 28

Which is NOT a type of bond?

Accepted Answer

Redemption bond

Answer

none of the choices

Answer

Government bond

Answer

Corporate bond

Question 29

It is the process of changing the cost of an asset to the revenues earned over the useful life of an asset.

Accepted Answer

Depreciation

Answer

Bond

Answer

Annuity

Answer

Perpetuity

Question 30

It is a type of depreciation due to the lessening in the demand for the function, which the property was designed to render.

Accepted Answer

Functional

Answer

Depletion

Answer

Physical

Answer

Deflation

Question 31

It is a type of depreciation due to the lessening of the ability of a property to produce result. Some of the common causes are wear and deterioration.

Accepted Answer

Physical

Answer

Functional

Answer

Deflation

Answer

Depletion

Question 32

Owners of bonds are called ______________.

Accepted Answer

both are correct

Answer

debt holders

Answer

creditors

Question 33

All assets can be depreciated.

Accepted Answer

False

Answer

True

Question 34

What is the current yield of a bond whose face value is Php100, 000 and pays a yearly interest of 10% if purchased at 100, 500?

FORMULA: $Y=\ \frac{Face\ value\ imes\ interest\ rate}{Price\ of\ bond}\ imes\ 100$

Accepted Answer

9.95%

Answer

0.0995%

Answer

9.5%

Answer

99.5%

Related quizzes

Related quizzes