A In relation to the time value of money, what is interest?

• a.)
• The cost of not having money today
• b.)
• The total value of an investment
• c.)
• The value of money today
• d.)
• The value of money in the future

B Select the best definition of a perpetuity.

• a.)
• An annuity whose payments can be made at any point during the period
• b.)
• An annuity that makes payments forever
• c.)
• An annuity that makes a payment every day
• d.)
• A single investment that grows forever

C Select the correct phrases to complete the sentence.

To find the future value of multiple cash flows, find the __________ of each cash flow and __________.

• a.)
• future value; add them together
• b.)
• future value; multiply them
• c.)
• present value; add them together
• d.)
• present value; multiply them

D What is the difference between APR and APY?

• a.)
• APY gives you a less accurate understanding of the interest rate of an investment, as compared to APR.
• b.)
• APY includes accrued compounding interest when calculating yield, whereas APR does not.
• c.)
• For the same loan, the APY is typically less than the APR.
• d.)
• APY is a simpler measure of yield than APR.