1. How is the future value of a mixed stream of cash flows calculated? How is the present value of a mixed stream of cash flows calculated?
2. What effect does compounding interest more frequently than annually have on (a) future value and (b) the effective annual rate (EAR)? Why?
3. How does the future value of a deposit subject to continuous compounding compare to the value obtained by annual compounding?
4. Differentiate between a nominal annual rate and an effective annual rate (EAR). Define annual percentage rate (APR) and annual percentage yield (APY).
5. How can you determine the size of the equal, annual, end-of-period deposits necessary to accumulate a certain future sum at the end of a specified future period at a given annual interest rate?
6. Describe the procedure used to amortize a loan into a series of equal periodic payments.
7. How can you determine the unknown number of periods when you know the present and future values single amount or annuity and the applicable rate of interest?