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Multiple Choice Quiz
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1
If the interest rate is greater than zero, the present value of a future payment of $10,000 will always be greater than $10,000.
A)True
B)False
2
An increase in the interest rate causes the present value of any given future payment to decline.
A)True
B)False
3
If a balance in an interest-bearing account grows by 5% per year, after 5 years, the balance will be 25% larger.
A)True
B)False
4
An increase in the interest rate causes the price of discount bonds to rise.
A)True
B)False
5
Creditors benefit from an unexpected increase in the inflation rate.
A)True
B)False





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