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Multiple Choice
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1

Both the future and present value of a sum of money are based on:
A)interest rate
B)number of time periods
C)both a and b
D)none of the above
2

An annuity is ___________________.
A)more than one payment
B)a series of unequal but consecutive payments
C)a series of equal and consecutive payments
D)a series of equal and non-consecutive payments
3

If you have $1000 and you plan to save it for 4 years with an interest rate of 10%, what is the future value of your savings?
A)$1464.00
B)$1000.00
C)$1331.00
D)cannot be determined
4

Time value of money is an important finance concept because:
A)it takes risk into account
B)it takes time into account
C)it takes compound interest into account
D)all of the above
5

The present value of a dollar to be received in the future is:
A)more than a dollar
B)equal to a dollar
C)less than a dollar
D)none of the above
6

The future value of a dollar that you invest today is:
A)more than a dollar
B)equal to a dollar
C)less than a dollar
D)none of the above
7

The future value of an annuity is:
A)less than each annuity payment
B)equal to each annuity payment
C)more than each annuity payment
D)none of the above
8

The concepts of present value and future value are:
A)directly related to each other
B)not related to each other
C)proportionately related to each other
D)inversely related to each other
9

If you win the lottery and you choose to have your proceeds distributed to you over a twenty-year time period, which calculation would you use to calculate the worth of those proceeds to you today?
A)future value of a lump sum
B)future value of an annuity
C)present value of a lump sum
D)present value of an annuity
10

You have $1000 you want to save. If four different banks offer four different compounding methods for interest, which method should you choose to maximize your $1000?
A)compounded daily
B)compounded quarterly
C)compounded semi-annually
D)compounded annually





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