1. The present value of an ordinary annuity is always .......... the present value of the corresponding annuity due.

a. sometimes greater and sometimes lower

b. Less than

c. Greater than

d. equal to

2.Consider a series of three payments of $2,000, $3,000, and $3,500 that occur at t=1, t=2, and t=4, respectively. let the annually compounded annual interest rate equal 5%. what is the time value of the stream at t=5?

3. Assume a $200,000 mortgage with APR = 12%. In addition, the loan is a 7-year balloon with a 25-year amortization. what is the monthly payment?

.4. A financial instrument that you own promises an annual payment at the end of every year for eternity. The first payment you will receive will equal $2,000. Payments will grow at an annual 2.3%. if the annually compounded discount rate is 7.3%, what is the value of your instrument today?

.5. Let the nominal annual interest rate be 13% and be compounded quarterly. what is the APY and what is the quarterly periodic rate?

.6. For a given nominal annual rate, the periodic interest rate is always higher than the APY.

a. True

b. False