1. The present value of a future lump sum decreases as the discount rate used decreases, all else held constant. a) True b) False

7. Banks are required by law to disclose to you the ___________ on their savings accounts and the ____________ they charge on loans:

a) APR / EAR

b) Yield / EAR

c) EAR / APR

d) APR / APR

10. Two annuities are the same in all respects except that one is an ordinary annuity and the other an annuity due. The PV and the FV of the annuity due is greater than that of the ordinary annuity:

a)True

b)False

12.The $ amount of periodic interest on an amortizing loan increases eachperiod over the life of the loan.

a) True

b) False

14. You have calculated the present value of a lump sum to be received in n years using a discount rate of r assuming annual compounding periods. If the compounding

period were to be quarterly rather than annual, you would have to modify your calculation by:

a)multiplying r x 4, dividing t/ 4

b)multiplying t x 4, dividing r / 4

c) multiplying both t and r by 4

d) dividing both t and r by 4