Ch 3 Time Value of Money
Quiz by Chen, Clara
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9 questions
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- Q1Costs and benefits must be put in common terms if they are to be compared.FalseTrue60s
- Q2Whenever a good trades in a competitive market, the price determines the value of the good.FalseTure60s
- Q3The Law of One Price states that if equivalent goods or securities are traded simultaneously in different competitive markets, they will trade for the same price in each market.TrueFalse60s
- Q4If an arbitrage opportunity exists, an investor can act quickly in the hope of making a risk-free profit.TrueFalse60s
- Q5You are scheduled to receive $10,000 in one year. What will be the effect of an increase in the interest rate on the present value of this cash flow?It will have no effect on the present value.The effect cannot be determined with the information provided.It will cause the present value to fall.It will cause the present value to rise.120s
- Q6A dollar today and a dollar in one year may be considered to be equivalent.TrueFalse30s
- Q7To calculate a cash flow's present value (PV), you must compound it.FalseTrue60s
- Q8What is the present value (PV) of $50,000 received twenty years from now, assuming the interest rate is 6% per year?$27,282.92$13,251.70$15,590.24$32,500.00120s
- Q9What is the future value (FV) of $50,000 in thirty years, assuming the interest rate is 12% per year?$32,500.00$1,497,996.11$1,273,296.69120s