FIN202 Chapter 5
Showing posts with label FIN202 Chapter 5. Show all posts
Showing posts with label FIN202 Chapter 5. Show all posts

Which of the following statements is false with respect to the present value of a future amount?

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Which of the following statements is false with respect to the present value of a future amount?



A) The higher the discount rate, the lower the present value of a single sum for a given time period.
B) The relation between present value and time is exponential.
C) The greater the time period, the lower the present value of a single sum for a given interest rate.
D) The lower the discount rate, the lower the present value of a single sum for a given time period.





Answer: D

Which of the following statements is true?

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Which of the following statements is true?



A) The longer the time period that funds are invested, the greater the future value, regardless of investment rate.
B) The lower the discount rate that funds are invested at, the greater the future value.
C) The shorter the time period that funds are invested, the greater the future value, regardless of investment rate.
D) The higher the interest rate, the slower the value of an investment will grow.




Answer: A

Which of the following statements is true?

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Which of the following statements is true?




A) A dollar received today is worth more than a dollar to be received in the future because future dollars are not affected by inflation.
B) A dollar to be received in the future is worth more than a dollar received today because of the positive impact of rates of return.
C) A dollar received today is worth more than a dollar to be received in the future because funds received today can be invested to earn a return.
D) A dollar to be received in the future is worth more than a dollar received today because it would have less risk associated with it.



Answer: C
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