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Student Name (Please Print) 32) Which of the following statements is CORRECT? A. A time line is not meaningful unless all cash flows occur annually. B. Time lines are not useful for visualizing complex problems prior to doing actual calculations. C. Time lines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly. D. Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities. 33) Your bank account pays an 8% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? A. The periodic rate of interest is 2% and the effective rate of interest is 4%. B. The periodic rate of interest is 8% and the effective rate of interest is greater than 8%. C. The periodic rate of interest is 4% and the effective rate of interest is less than 8%. D. The periodic rate of interest is 2% and the effective rate of interest is greater than 8%. 34) Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? A. The monthly payments will decline over time. B. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment. C. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity. D. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%. 35) Starting to invest early for retirement increases the benefits of compound interest. A. True B. False Page 8 of 12