sofia financial 100 unit 2 milestone,

2/15/2021 Sophia :: Welcome




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You passed this Milestone
19 questions were answered correctly.
UNIT 2 — MILESTONE 2
1 question was answered incorrectly.
1

Select one advantage of an annuity for a borrower.



Annuities do not charge interest.



It can be easier to make regular payments rather than a single lump sum.



The payment amount may go down if interest rates fall.



The sum of all the payments will be less than the original loan amount.

CONCEPT
Annuities
2

Which of the following is true for calculating the future value of multiple cash flows?



To find the FV of multiple cash flows, add the PV of each cash flow together and use the total in the
formula for FV.



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You must choose the same point in the future for each individual cash flow to determine the FV of
multiple investments.



You can only find the FV of multiple cash flows if the payments occur with the same regularity.



It is simpler to find the FV of irregular cash flows than of annuities.

CONCEPT
Valuing Multiple Cash Flows
3

You loan $30,000 of your life savings to a friend for five years at 2% simple interest annually.

What is the value of your $30,000 in five years?



$33,000



$27,000



$33,122



$26,878

CONCEPT
Future Value, Single Cash Flows
4

A fund that is designed to follow a major stock index and represents an attractive, inexpensive option for
investors is a(n) __________.



exchange-traded fund



mutual fund



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