Answered step by step
Verified Expert Solution
Question
1 Approved Answer
16.) True or False: Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods. A) True B)
16.) True or False: Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods. A) True B) False 17.) True or False: Disregarding risk, if money has time value, it is impossible for the future value of a given sum to exceed its present value. A) True B) False 18.) True or False: The present value of a future sum decreases as either the discount rate or the number of periods per year increases, other things held constant. A) True B) False 19.) True or False:All other things hel ++d constant, the present value of a given annual annuity increases as the number of periods per year increases. A) True B) False 20.) True or False:As a result of compounding, the effective annual rate on a bank deposit ( a loan) is always equal to or less than the nominal rate on the deposit (or loan). A) True B) False 21.) A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiznmual compounding. Which of the following statements is CORRECT? A) The periodic interest rate is greater than 3%. B) The periodic rate is less than 3%. C) The present vahe of the $1,000 would be smaller if interest were compounded monthly rather than semiannually. D) The present vahe would be greater if the lump sum were discounted back for more periods. 22.) Your bank account pays a 6% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? A) The periodic rate of interest is 1.5% and the effective rate of interest is 3%. B) The periodic rate of interest is 6% and the effective rate of interest is greater than 6%. C) The periodic rate of interest is 3% and the effective rate of interest is 6%. D) The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started