Special Application of Time Value of Money Mcqs 1-10

1. Which of the following statements is most correct?

(a) If annual compounding is used, the effective annual rate equals the nominal rate

(b) If annual compounding is used, the effective annual rate equals the periodic rate

(c) If a loan has a 12 % nominal rate with semi-annual compounding, its effective annual rate is equal to 11.66 %

(d) Statements a and b are correct

Correct! Wrong!

2. What is the value of Rs. 100 perpetuity if interest is 7%?

(a) Rs. 12,321

(b) Rs. 1,429

(c) Rs. 21,350

(d) None

Correct! Wrong!

3. If you want to deposit money into bank, what will be yours choice?

(a) Compounding annually

(b) Compounding Semi-annually

(c) Compounding monthly

(d) Compounding daily

Correct! Wrong!

4. Which of the following is not the present value of the amount?

(a) Intrinsic value

(b) Market price

(c) Fair price

(d) Theoretical price

Correct! Wrong!

5. The effective rate of interest will always be ____ the nominal rate?

(a) Greater than

(b) Equal to

(c) Less than

(d) All of before

Correct! Wrong!

6. In Rule 69, we divide 69 by “n” and add what amount?

(a) 12

(b) 0.35

(c) 0.50

(d) 0.12

Correct! Wrong!

7. If a saving plan offers a nominal rate of 8%, compounding quarterly on a 1-year investment, what will be the “EIR”?

(a) 8.24%

(b) 6.53%

(c) 1.08%

(d) 0.082%

Correct! Wrong!

8. More frequent compounding results in _ future values and __ present values than less frequent compounding at the same interest rate?

(a) Higher, Higher

(b) Lower, Higher

(c) Higher, Lower

(d) Lower, Lower

Correct! Wrong!

9. What Stream of cash flows continue indefinitely?

(a) Perpetuity

(b) Annuity

(c) Futurity

(d) none of the above

Correct! Wrong!

10. You take a mortgage loan for Rs. 10,000 for 20 years (monthly repayments). The rate of interest is 0.6% per month. What are your monthly payments?

(a) Rs. 70.815

(b) Rs. 75.775

(c) Rs. 81.195

(d) Rs. 78.735

Correct! Wrong!

Special Application of Time Value of Money MCQs (1-10)

1. Which of the following statements is most correct?

2. What is the value of Rs. 100 perpetuity if interest is 7%?

3. If you want to deposit money into bank, what will be yours choice?

4. Which of the following is not the present value of the amount?

5. The effective rate of interest will always be ____ the nominal rate?

6. In Rule 69, we divide 69 by “n” and add what amount?

7. If a saving plan offers a nominal rate of 8%, compounding quarterly on a 1-year investment, what will be the “EIR”?

8. More frequent compounding results in _ future values and __ present values than less frequent compounding at the same interest rate?

9. What Stream of cash flows continue indefinitely?

10. You take a mortgage loan for Rs. 10,000 for 20 years (monthly repayments). The rate of interest is 0.6% per month. What are your monthly payments?

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Special Application of Time Value of Money MCQs (1-10)

1. Which of the following statements is most correct?

2. What is the value of Rs. 100 perpetuity if interest is 7%?

3. If you want to deposit money into bank, what will be yours choice?

4. Which of the following is not the present value of the amount?

5. The effective rate of interest will always be ____ the nominal rate?

6. In Rule 69, we divide 69 by “n” and add what amount?

7. If a saving plan offers a nominal rate of 8%, compounding quarterly on a 1-year investment, what will be the “EIR”?

8. More frequent compounding results in _________ future values and __________ present values than less frequent compounding at the same interest rate?

9. What Stream of cash flows continue indefinitely?

10. You take a mortgage loan for Rs. 10,000 for 20 years (monthly repayments). The rate of interest is 0.6% per month. What are your monthly payments?

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8. More frequent compounding results in _ future values and __ present values than less frequent compounding at the same interest rate?