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1. TRUE or FALSE: If you invest money for 10 years at 8% interest, compounded quarterly, you are effectively investing money for 40 three-month periods,
1. TRUE or FALSE: "If you invest money for 10 years at 8% interest, compounded quarterly, you are effectively investing money for 40 three-month periods, during which you receive 2% interest each period." a. True b. False 2. TRUE or FALSE: "As the interest rate decreases, the present value of future cash flows increases." a. True b. False 3. TRUE or FALSE: "If the interest rate is greater than 0%, a dollar today is worth more than a dollar tomorrow." a. True b. False 4. TRUE or FALSE: "As the number of compounding periods per year decreases (e.g., from monthly compounding to semi-annual compounding), the present value of future cash flows increases." a. True b. False 5. TRUE or FALSE: "The rate of return on any perpetuity is equal to its annual cash flow divided by its present value." a. True b. False 6. TRUE or FALSE: "The present value of a future sum of money decreases as the number of years before the payment is received increases." a. True b. False
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