FIN 3403 UCF EXAM 2 QUESTIONS
ALL ANSWERED CORRECT RATED
A+.
the amount of money given today is more valuable than the same amount a year from now due
to the ______ of holding the money - Answer opportunity cost
the time value of money problems come in two forms which are? - Answer compounding and
discounting
how do compounding and discounting differ? - Answer compounding is the calculation of
finding the FV while discounting is finding the PV of a future value
what is the one type of future value calculation that can not be made with a calculator? -
Answer continuous compounding
what is the equation used for continuous compounding? - Answer FV= PV e^IN
so if we have a FV of 1,000 invested at 7% for 100 years with continuous compounding it can be
calculated as? - Answer (0.07)(100)= 7 shift e x 1000
there is a positive relationship between the interest rate and future value, meaning when FV
increases when.... - Answer interest rates rise....decreases when falls
there is a positive relationship between N and what value - Answer future value, the more
periods the larger it grows
there is a negative relationship between interest rates and ? - Answer present values, the
present value will get larger as the interest rates fall
cash flow streams are? - Answer two or more payments made at different point in times
an annuity is ? - Answer a series of equal annual cash flows
, perpetuities - Answer are a stream of equal payments that go on forever
a perpetuities is calculated as - Answer PV= PMT/i
the PV of an annuity due is greater than the PV of ordinary why? - Answer the money is
received earlier so there is more time to accumulate interest
to find uneven cash flows, instead of reverting all the way back to PV for each payment which
functions can you use in your calculator? - Answer CF, shift NPV
effective annual rate equation is - Answer (1 + quoted rate /m ) ^m - 1 where m is number of
compounding periods
how to determine the percentage of first and last 40 payment - Answer principal/ payment
interest/payment
how to calculate APY, annual percentage yield of the quoted rate
12 periods, 7 interest rate, 25,000 car - Answer 12 SHIFT P/YR....7 I/YR...SHIFT EEF% .. should
get 7.23%
which of the following rate would you like when taking out a loan?
4% annually
4% quarterly
4% monthly
5 % monthly - Answer 4% annually because you would want the lowest interest rate when
taking out a loan
one of the bedrock principles of finance is is that risk and expected return are positively related,
true or false - Answer true
ALL ANSWERED CORRECT RATED
A+.
the amount of money given today is more valuable than the same amount a year from now due
to the ______ of holding the money - Answer opportunity cost
the time value of money problems come in two forms which are? - Answer compounding and
discounting
how do compounding and discounting differ? - Answer compounding is the calculation of
finding the FV while discounting is finding the PV of a future value
what is the one type of future value calculation that can not be made with a calculator? -
Answer continuous compounding
what is the equation used for continuous compounding? - Answer FV= PV e^IN
so if we have a FV of 1,000 invested at 7% for 100 years with continuous compounding it can be
calculated as? - Answer (0.07)(100)= 7 shift e x 1000
there is a positive relationship between the interest rate and future value, meaning when FV
increases when.... - Answer interest rates rise....decreases when falls
there is a positive relationship between N and what value - Answer future value, the more
periods the larger it grows
there is a negative relationship between interest rates and ? - Answer present values, the
present value will get larger as the interest rates fall
cash flow streams are? - Answer two or more payments made at different point in times
an annuity is ? - Answer a series of equal annual cash flows
, perpetuities - Answer are a stream of equal payments that go on forever
a perpetuities is calculated as - Answer PV= PMT/i
the PV of an annuity due is greater than the PV of ordinary why? - Answer the money is
received earlier so there is more time to accumulate interest
to find uneven cash flows, instead of reverting all the way back to PV for each payment which
functions can you use in your calculator? - Answer CF, shift NPV
effective annual rate equation is - Answer (1 + quoted rate /m ) ^m - 1 where m is number of
compounding periods
how to determine the percentage of first and last 40 payment - Answer principal/ payment
interest/payment
how to calculate APY, annual percentage yield of the quoted rate
12 periods, 7 interest rate, 25,000 car - Answer 12 SHIFT P/YR....7 I/YR...SHIFT EEF% .. should
get 7.23%
which of the following rate would you like when taking out a loan?
4% annually
4% quarterly
4% monthly
5 % monthly - Answer 4% annually because you would want the lowest interest rate when
taking out a loan
one of the bedrock principles of finance is is that risk and expected return are positively related,
true or false - Answer true
