1. One type of compensation provided by the time value of money is compensation for expected consumption.

a. True

b. False2.

One type of compensation provided by the time value of money is compensation for risk.

a. True

b. False

3. Compounding is the conversion of future cash flow amounts to their present value.

a. True

b. False

4. Discounting is the conversion of future cash flow amounts to their present value.

a. True

b. False

5. The interest that accrues on both the principal and the past unpaid accrued interest is called compound interest.

a. True

b. False