You are asked to choose between a ten-year deposit that pays 10% p.a. compound interest and a similar deposit that pays 10.5% p.a. simple interest. Which investme will you choose? A) deposit with 10% p.a. compound interest. B) deposit with 10.5% p.a. simple interest. C) either of them because they are indifferent. D) There is not enough information to answer the question. A surplus unit is A) income for the period exceeds expenditures. B) income and expenditures for the period are equal C) spending is entirely financed by borrowing. D) expenditures for the period exceed receipts. Which of the following statements is CORRECT? A) In terms of an annuity, its present value is the reciprocal of its future value. B) If nominal interest rate, future value and time to maturity is held constant, an increase in the compounding frequency will increase the present value of a lump sum payment in the future. C) If nominal interest rate, mortgage principal and time to maturity is held constant, mortgagee will pay more interest if the payment is made monthly rather than quarterly. D) The payment made each period under an amortized mortgage is constant, which consists of interest portion and principal portion. The later we are in the life of the mortgage, the smaller the interest portion (as a % of the payment)