Time Value of Money MCQs

Previous Practice: Finance Basics MCQs

Next Practice: Future Value of a Single Amount MCQs

MCQs 1-10

Click The Option and See Result

1. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as?

(a) Compound interest

(b) Future value

(d) Simple interest

Correct! Wrong!

2. Treasury bills are?

(a) Issued on a premium basis and pay a fixed annual interest rate

(b) Issued on a discount basis and mature at par

(d) Issued on a discount basis and pay a fixed annual interest rate

Correct! Wrong!

3. Nominal Interest Rate is also known as?

(a) Annual percentage rate

(b) Effective interest Rate

(d) Coupon rate

Correct! Wrong!

4. The concept of compound interest refers to?

(a) The process of gradually retiring a debt through periodic payments of principal and interest

(b) The process of servicing a debt with regular interest payments, followed lump sum payment of principal and interest at the end of the loan term

(d) The process of earning interest on an original amount, plus interest on interest previously earned

Correct! Wrong!

5. The value of money to be received in the future is _______the value of the same amount of money in hand today?

(a) Higher than

(b) Lower than

(d) None of the above

Correct! Wrong!

6. The Time value of money must be considered in total outlay decision because?

(a) Cash inflows and out flows occur at different point

(b) Inflation greatly reduce the outflows

(d) Cash flows are not known with certainty

Correct! Wrong!

7. Interest paid (earned) on both the original principal borrowed (lent) and previous interest allowed (earned) is often referred to as __________?

(a) Compound interest

(b) Double interest

(d) Present value

Correct! Wrong!

8. Money has time value because?

(a) Individuals prefer future consumption to present consumption

(b) Money today is worth more than money tomorrow in terms of purchasing power

(d) B and C above

Correct! Wrong!

9. The real rate of interest reflects compensation for?

(a) Present value

(b) Future value

(d) None of above

Correct! Wrong!

10. Interest has 3 types?

(a) Fixed rate, current rate, market rate

(b) Market rate, combination rate, fixed rate

(d) Fixed rate, floating rate, combination rate

Correct! Wrong!

Time Value of Money MCQs (1-10)

Super Excellent ***

Excellent ***

Very Good **

Good *

Fair

Fail

> Read Time Value of Money…

MCQs 11-20

Click The Option and See Result

11. The basic rule of the time value of money is?

(a) Investments will always be worth more tomorrow than they are today

(b) Its always wiser to save a dollar for tomorrow than to spend it today

(d) All of the above express an aspect of the basic rule of time value of money

Correct! Wrong!

12. A decrease in the supply for loanable funds, holding demand constant, will cause interest rates to?

(a) Increase

(b) Decrease

(d) Not enough information to tell

Correct! Wrong!

13. The value of money results from?

(a) Its backing

(b) Rates set by the State Bank

(d) None of the above

Correct! Wrong!

14. The basic price that equates the demand for and supply of loanable funds in the financial markets is the _______?

(a) Interest rate

(b) yield curve

(d) Cash price

Correct! Wrong!

15. If the interest rate is greater than 0%, then a dollar today is worth?

(a) Less than a dollar tomorrow

(b) The same as a dollar tomorrow

(d) There is not sufficient information to tell

Correct! Wrong!

16. In an inflationary period, interest rates have a tendency to?

(a) Fall

(b) Rise

(d) Act erratically

Correct! Wrong!

17. Which of the following is not a determinant of market interest rates?

(a) The inflation premium

(b) The maturity risk premium

(d) The real rate of interest

Correct! Wrong!

18. An unexpected increase in inflation should?

(a) Increase the demand for loanable funds

(b) Decrease the interest rate on loans

(d) None of the above

Correct! Wrong!

19. If the interest rate is less than 0%, then a dollar today is worth?

(a) More than a dollar tomorrow

(b) The same as a dollar tomorrow

(d) There is not sufficient information to tell

Correct! Wrong!

20. The risk-free interest rate is composed of?

(a) An inflation premium and a default risk premium

(b) A default risk premium and a maturity risk premium

(d) A real rate of interest and an inflation premium

Correct! Wrong!

Search

Back To Finance MCQs

Next To Future Value of Single Amount MCQs

More Interest

Future Value of a Single Amount MCQs

Future Value of a Single Amount Problems

Present Value of a Single Amount

Present Value of a Single Amount MCQs

Present Value of a Single Amount Problems

References

Financial Management: Theory and Practice, Dr Eugene F Brigham & C Micheal Ehrhardt

Fundamentals of Financial Management: Concise Edition, Brigham Houston

The Economist Guide to Financial Management, John Tennet

Financial Management: Core Concepts, Raymond M Brooks

7 Comments

DMC5 on April 14, 2019 at 9:19 am

After looking into a few of the blog posts on your website, I really appreciate your way of writing a blog. I added it to my bookmark site list and will be checking back soon. Please visit my website too and let me know what you think.
Amna on March 17, 2019 at 5:56 pm

There is a conflict between mcq 5 & 8. kindly check it again.
Amna on March 17, 2019 at 2:06 pm

Its very useful and user friendly thanks for sharing this helpful information.
- zaheer on March 19, 2019 at 4:54 pm
  
  Thank you Amna
Grisel Pietrafesa on March 13, 2019 at 6:47 am

being a blogger myself . i can see someone with great potential.
Government Alljobspo on February 11, 2019 at 12:56 pm

It is truly a great and useful piece of info. I am satisfied that you shared this helpful information with us. Please stay us up to date like this. Thank you for sharing.
Akwaibom nelajobs on February 11, 2019 at 6:10 am

I truly appreciate this post. I have been looking all over for this! Thank goodness I found it on Bing. You have made my day! Thx again!

Time Value of Money MCQs

MCQs 1-10

Click The Option and See Result

1. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as?

2. Treasury bills are?

3. Nominal Interest Rate is also known as?

4. The concept of compound interest refers to?

5. The value of money to be received in the future is _______the value of the same amount of money in hand today?

6. The Time value of money must be considered in total outlay decision because?

7. Interest paid (earned) on both the original principal borrowed (lent) and previous interest allowed (earned) is often referred to as __________?

8. Money has time value because?

9. The real rate of interest reflects compensation for?

10. Interest has 3 types?

MCQs 11-20

Click The Option and See Result

11. The basic rule of the time value of money is?

12. A decrease in the supply for loanable funds, holding demand constant, will cause interest rates to?

13. The value of money results from?

14. The basic price that equates the demand for and supply of loanable funds in the financial markets is the _______?

15. If the interest rate is greater than 0%, then a dollar today is worth?

16. In an inflationary period, interest rates have a tendency to?

17. Which of the following is not a determinant of market interest rates?

18. An unexpected increase in inflation should?

19. If the interest rate is less than 0%, then a dollar today is worth?

20. The risk-free interest rate is composed of?

Search

Related Topics

More Interest

Further Readings

References

7 Comments