1 1 pts You have a choice of investing in a financial instrument that either compounds interest on an annual basis or on a quarterly basis. Which would you choose? OI would be indifferent; I would earn the same with either compounding OI would prefer simple interest O Annual compounding O Quarterly compounding Question 2 1 pts Assume you can obtain an annual interest rate of 12% compounding monthly. You are going to invest $1,000 for two years. Over how many time periods will you be compounding your return? O 12 02 01 24 Question 3 Assume you can obtain an annual interest rate of 12% compounding monthly. You are going to invest $1,000 for two years. What interest will be compounded? O 12% O2% 24% 1% 1 pts D Question 4 1 pts Sam invests $100 each month into his retirement account. He wants to determine how much will accumulate in his retirement account if he invests for the next 10 years if he can get a 6% return. How would he do this? This is a future value of an annuity with a .5% interest rate and 120 payments O This is a future value of $1 with an interest rate of .5% and 120 time periods. O This is a future value of $1 with an interest rate of 6% and 10 time periods. O This is a future value of an annuity with a 6% interest rate and 10 payments Question 5 1 pts Joe wants to have $20,000 three years from now so that he can make a down payment on a condo. If he can get a 5% interest rate, how does he determine how much to invest? O Multiply $20,000 times the future value of $1 with an interest rate of 5% and 3 time periods. Multiply $20,000 times the present value of $1 with an interest rate of 5% and 3 time periods. O Divide $20,000 by the present value of $1 with a 5% interest rate and three time periods. O Joe would need to invest $20,000 less 3" (5% of 20,000) or $17,000