TCU Finance Exit Exam – Questions & Accurate
Answers
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (187)
Rate of return you could earn on an Opportunity Cost
alternative investment of similar risk
Finding Present Value is called Discounting
______________, the reverse of
compounding.
If payments are equal and are made Annuity
at fixed intervals, then the series is an
_____________.
If payments occur at the end of each Ordinary Annuity
period, then it is an ___________________.
Mortgages, car loans, and student Ordinary Annuity
loans.
What type of annuities are these?
,If payments are made at the Annuity Due
beginning of each period, then it's an
_______________.
Rental payments, life insurance. Annuity Due
What type of annuities are these?
How do you find the Future Value of FV = PMT[((1+r)^n - 1)/r]
an Ordinary Annuity (END)?
PV = 0 (for calculator)
How do you find the Future Value of P = (PMT [((1 + r)n - 1) / r])(1 + r)
an Annuity Due (BEGIN)?
True/False: The FV of an annuity due True
will be greater than that of a similar
ordinary annuity.
How do you find the Present Value of P = PMT [(1 - (1 / (1 + r)n)) / r]
an Ordinary Annuity?
How do you find the Present Value of P = (PMT [(1 - (1 / (1 + r)n)) / r]) x (1+r)
an Annuity Due?
True/False: The PV of an annuity due False (Greater than)
will be less than that of a similar
ordinary annuity.
In 1749 the British government issued Consols
some bonds whose proceeds were
used to pay off other British bonds
and since this action consolidated the
government's debt, the new bonds
were called ___________.
Promise to pay interest perpetually Perpetuity
, The interest rate that is actually Effective Annual Rate (EAR)
earned or paid on an investment,
loan, or other financial product due
to the result of compounding over a
given time period
What is another name for Effective EFF% (Effective Percentage)
Annual Rate (EAR)?
Calculation for Effective Annual Rate (1 + Inom/M)^M - 1.0
(EAR).
Inom/M = Periodic rate
M = number of periods
When should Effective Annual Rate Should be used to compare the effective cost or
be used ? rate of return on loans or investments when
payment periods differ
A loan that is to be repaid in equal Amortized Loan
amounts on a monthly, quarterly, or
annual basis
Each payment will consist of two Amortization Schedule
parts - interest and repayment of
principal - the breakdown is shown
on a __________________________.
How does Time effect present and The later you receive the payment, the lower the
future values of cash flows? present value of the cash flow
How does Interest Rate effect The higher the interest rate, the higher the value of
present and future values of cash the cash flows
flows?
Long term contract which a borrower Bond
agrees to make payments of interest
and principal, on specific dates, to
the holders of the bond
Answers
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (187)
Rate of return you could earn on an Opportunity Cost
alternative investment of similar risk
Finding Present Value is called Discounting
______________, the reverse of
compounding.
If payments are equal and are made Annuity
at fixed intervals, then the series is an
_____________.
If payments occur at the end of each Ordinary Annuity
period, then it is an ___________________.
Mortgages, car loans, and student Ordinary Annuity
loans.
What type of annuities are these?
,If payments are made at the Annuity Due
beginning of each period, then it's an
_______________.
Rental payments, life insurance. Annuity Due
What type of annuities are these?
How do you find the Future Value of FV = PMT[((1+r)^n - 1)/r]
an Ordinary Annuity (END)?
PV = 0 (for calculator)
How do you find the Future Value of P = (PMT [((1 + r)n - 1) / r])(1 + r)
an Annuity Due (BEGIN)?
True/False: The FV of an annuity due True
will be greater than that of a similar
ordinary annuity.
How do you find the Present Value of P = PMT [(1 - (1 / (1 + r)n)) / r]
an Ordinary Annuity?
How do you find the Present Value of P = (PMT [(1 - (1 / (1 + r)n)) / r]) x (1+r)
an Annuity Due?
True/False: The PV of an annuity due False (Greater than)
will be less than that of a similar
ordinary annuity.
In 1749 the British government issued Consols
some bonds whose proceeds were
used to pay off other British bonds
and since this action consolidated the
government's debt, the new bonds
were called ___________.
Promise to pay interest perpetually Perpetuity
, The interest rate that is actually Effective Annual Rate (EAR)
earned or paid on an investment,
loan, or other financial product due
to the result of compounding over a
given time period
What is another name for Effective EFF% (Effective Percentage)
Annual Rate (EAR)?
Calculation for Effective Annual Rate (1 + Inom/M)^M - 1.0
(EAR).
Inom/M = Periodic rate
M = number of periods
When should Effective Annual Rate Should be used to compare the effective cost or
be used ? rate of return on loans or investments when
payment periods differ
A loan that is to be repaid in equal Amortized Loan
amounts on a monthly, quarterly, or
annual basis
Each payment will consist of two Amortization Schedule
parts - interest and repayment of
principal - the breakdown is shown
on a __________________________.
How does Time effect present and The later you receive the payment, the lower the
future values of cash flows? present value of the cash flow
How does Interest Rate effect The higher the interest rate, the higher the value of
present and future values of cash the cash flows
flows?
Long term contract which a borrower Bond
agrees to make payments of interest
and principal, on specific dates, to
the holders of the bond
