1) The time value of money is created by:

a) the elimination of the opportunity cost as a consideration

b) the fact that the mere passing of time increases the value of money

c) the fact that saving money is better than spending it

d) the existence of profitable investment alternatives and interest rates

2) In an amortization schedule for a six-year loan with equal annual principal repayments,__.

a) the annual payment stays the same

b) amount of principal repaid decreases each year

c) less than half of the loan would be repaid at the end of year three

d) the annual payments are higher in the earlier years