Chapter 04 Discounted Cash Flow Valuation Answer Key
日本cosmeMultiple Choice Questions
1. An annuity stream of cash flow payments is a t of:
A. level cash flows occurring each time period for a fixed length of time.
B. level cash flows occurring each time period forever.
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C. increasing cash flows occurring each time period for a fixed length of time.
D. increasing cash flows occurring each time period forever.
E. arbitrary cash flows occurring each time period for no more than 10 years.
Difficulty level: Easy
Topic: ANNUITY
Type: DEFINITIONS
2. Annuities where the payments occur at the end of each time period are called _____, whereas _____ refer to annuity streams with payments occurring at the beginning of each time period.
A. ordinary annuities; early annuities
B. late annuities; straight annuities
C. straight annuities; late annuities
D. annuities due; ordinary annuities
E. ordinary annuities; annuities due
Difficulty level: Easy
Topic: ANNUITIES DUE
Type: DEFINITIONS
3. An annuity stream where the payments occur forever is called a(n):
A. annuity due.
B. indemnity.
C. perpetuity.庆国庆手抄报图片>浮组词
D. amortized cash flow stream.
E. amortization table.
Difficulty level: Easy
Topic: PERPETUITY
Type: DEFINITIONS
4. The interest rate expresd in terms of the interest payment made each period is called the _____ rate.
A. stated annual interest
B. compound annual interest
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C. effective annual interest
D. periodic interest
E. daily interest
Difficulty level: Easy
Topic: STATED INTEREST RATES
Type: DEFINITIONS
5. The interest rate expresd as if it were compounded once per year is called the _____ rate.
A. stated interest
B. compound interest
C. effective annual
D. periodic interest
E. daily interest
Difficulty level: Easy
Topic: EFFECTIVE ANNUAL RATE
Type: DEFINITIONS
6. The interest rate charged per period multiplied by the number of periods per year is called the _____ rate.
A. effective annual
B. annual percentage
C. periodic interest
D. compound interest
E. daily interest
Difficulty level: Easy
Topic: ANNUAL PERCENTAGE RATE
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7. Paying off long-term debt by making installment payments is called:
A. foreclosing on the debt.
B. amortizing the debt.
C. funding the debt.
D. calling the debt.
E. None of the above.
Difficulty level: Easy
Topic: AMORTIZATION
Type: DEFINITIONS
8. You are comparing two annuities which offer monthly payments for ten years. Both annuities are identical with the exception of the payment dates. Annuity A pays on the first of each month while annuity B pays on the last day of each month. Which one of the following statements is correct concerning the two annuities?
