Please note that some of the answer choices, or answers that are very close, are used in different questions. This has caused us no difficulties, but please take this into account when you make up exams.

Which of the following statements is CORRECT?

Group of answer choices

Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts.

Time lines are useful for visualizing complex problems prior to doing actual calculations.

Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.

A time line is not meaningful unless all cash flows occur annually.

Time lines cannot be constructed for annuities where the payments occur at the beginning of the periods.

You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?

Group of answer choices

The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD.

The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE.

The present value of ORD exceeds the present value of DUE, while the future value of DUE exceeds the future value of ORD.

A rational investor would be willing to pay more for DUE than for ORD, so their market prices should differ.

If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant.