
Time Value of Money
Quiz by Amanda Beaudo
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23 questions
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- Q1What does opportunity cost refer to?The monetary cost of an itemThe benefit received from a decisionThe time it takes to make a decisionThe value of the best alternative foregone30s
- Q2What is compound interest?Interest calculated based on the number of yearsInterest calculated only on the accumulated interest from previous periodsInterest calculated on both the initial principal and the accumulated interest from previous periodsInterest calculated only on the initial principal30s
- Q3What is simple interest?Interest calculated based on the number of yearsInterest calculated on both the initial principal and the accumulated interest from previous periodsInterest calculated only on the initial principalInterest calculated only on the accumulated interest from previous periods30s
- Q4What is the difference between simple interest and compound interest?Simple interest is calculated only on the initial principal, while compound interest is calculated on both the initial principal and the accumulated interest from previous periods.Simple interest is calculated on the accumulated interest from previous periods, while compound interest is calculated only on the initial principalSimple interest is calculated on both the initial principal and the accumulated interest from previous periods, while compound interest is calculated only on the initial principalSimple interest is calculated based on the number of years, while compound interest is calculated on both the initial principal and the accumulated interest from previous periods30s
- Q5What is the formula for calculating compound interest?A = P + IA = P(1 + rt)A = P(1 + r/n)^(nt)A = P(1 + r)A = P + Prt30s
- Q6What is the formula for calculating simple interest?I = P * r * tA = P + PrtA = P + IA = P(1 + r/n)^(nt)A = P(1 + r)30s
- Q7What is the impact of inflation on fixed-income individuals?More affordable housingAn increase in savingsA decrease in purchasing powerHigher wages30s
- Q8What is the definition of inflation?A sustained increase in the general price level of goods and services in an economy over a period of timeA stable general price level of goods and services in an economyA decrease in the cost of living for consumersA sudden decrease in the general price level of goods and services in an economy30s
- Q9What is demand-pull inflation?Technological advancementsGovernment intervention in the economyWhen consumer demand exceeds the supply of goods and servicesA decrease in consumer demand30s
- Q10What is cost-push inflation?A decrease in production costsIncreased consumer savingsGovernment intervention in the economyWhen production costs increase and businesses pass on those costs to consumers30s
- Q11What is the future value of $5000 invested at an annual interest rate of 5% for 7 years compounded annually?6789.127321.196152.246743.6330s
- Q12What is the future value of $1000 invested at an annual interest rate of 8% for 10 years compounded quarterly?2305.601895.271973.482158.9230s
- Q13What is the future value of a $5,000 annuity after 10 years, earning 8% compounded annually?$9,055.47$7,500$10,000$12,50030s
- Q14John invested $2,000 in a savings account with an annual interest rate of 4%. How much will he have in his account after 5 years, considering simple interest?$1,500$2,200$2,400$2,80030s
- Q15Sam deposited $500 in a savings account with a simple interest rate of 3%. After 2 years, how much interest will he have earned?$60$15$30$4530s