Quiz Instructions D Question 1 1 pts Which of the following statements is true based on the set up of this question? You invest $1000 in an account that is compounded monthly earning 4% annual interest for ten years. The compounding factor in this equation Is 1 O The compounding factor In this equation is 12. O The'r for this question is 10 O The'n' for this question Is 4 O There Isn't enough Information to find the compounding factor D Question 2 1 pts Which of the following statements is true about compound interest? O None of the options are true O You earn Interest on your Interest only O The Interest earned on your principal goes to another account to be held for future use O You will earn more Interest In the first year than any other year If you have compound Interest D You earn interest on your principal and Interest already earned Question 3 1 pts You get a large bonus from work and want to know how much money you will have if you invest it for five years. Which of the the following formulas would give you your answer? O FV O Nominal Interest Rate O PV O PVA O FVA D Question 4 1 pts Which of the following would NOT increase the future value of an investment? O Increasing how often Interest is compounded " Increasing the amount Initially Invested O Increasing the rate of return earned on the Investment O Increasing the amount of time the money is Invested O Decrease how often Interest is compounded Question 5 1 pts You are trying to decide where to invest your money for the future. With inflation forecast to be 5% and the bank offering you 7% rate of return, which of the following statements would be true. O The Interest rate offered by the bank must compensate you for your opportunity cost, risk and Inflation. O The Interest rate offered by the bank must con portunity cost and risk. O You need more Information to figure out the real rate of return on this Investment. O All of the options are true statements. O Your real rate of return is actually negative. Question 6 1 pts You have the option to take a lump sum payout of $10,000 or take $1000 for 8 years. Which formula would you use to help make your choice? O Not enough Information to answer the question OFVA O PVA O PV O FV D Question 7 1 pts Using the present value calculation, we can determine O What a future value is worth to us today O How much we need to replace money today O The amount needed to save in order to have a future amount O What a future value is worth in the future O what a present value is worth to us today D Question 8 1 pts Which of the following is NOT needed in order to solve a future value (FV} calculation? O Future Value O Interest Rate O Present Value O Length of time O Compounding factorQuestion 9 1 pts Which of the following statements correctly illustrates the Time Value of Money as discussed in class and in the reading? 0 It is always better to take payment in the present than the in future. 0 None of the options illustrate time value of money. 0 It never makes sense to take money in the future instead of in the present. 0 Money in the future is worth more than money in the present because of ination. O The present value and future value of money are different due to ination, opportunity cost and risk. Question 10 1 pts Which of the following would increase the present value of an equation? 0 A higher interest rate 0 A longer time period 0 None of the options are true 0 More frequent compounding O A lower interest rate Question 11 1 pts Which of the following scenarios could be solved using the PVA formula? 0 You won the lottery and can take $5000 now or $6000 if you wait 2 years 0 You got a raise of $50 a week and want to know how much it would be if you invested in over the next three years 0 You graduated early so you got $1000. how much will you have if you invest it for ten years 0 You are going to get a gift of $500 when you graduate in two years 0 You are going to be receiving Social Security benets for the next 20 years, what is that worth to you today