QUESTION 9 Which statement best relates NPV and IRR? None of the given statements are correct. NPV discounts cash flows by using the internal rate of return for discounting. IRR is the discount rate that makes NPV equal zero. IRR is the NPV divided by the initial investment.

QUESTION 8

An annuity in which the first cash flow is to occur immediately is known as a/an:

Ordinary annuity

Deferred annuity

Perpetuity

Annuity due

QUESTION 7

What is the present value of $1 million payable in 180 days at 8.00% per annum simple interest (correct to two decimal places)?

None of the given answers.

$920,000

$925,925.93

$962,045.33

QUESTION 6

Financial institutions that allow a customer to transfer a risk to them, in which the financial institution provides payment if a loss occurs is provided by.

Money market corporations

Unit trusts

Insurance companies

Depository financial institutions

QUESTION 5

Which of the following statements with regard to general insurance companies is true?

General insurance companies are more likely to acquire long-term assets than short-term securities, due to liquidity preferences.

General insurance companies are more likely to acquire long-term assets because their liabilities are long-term in nature.

General insurance companies tend to acquire short-term assets because they have relatively unpredictable inflows and outflows.

The Reserve Bank of Australia regulates general insurance companies.