FIN 3403 UCF EXAM 2 LATEST UPDATE
the amount of money given today is more valuable than the same amount a year from
now due to the ______ of holding the money - ANSWER opportunity cost
the time value of money problems come in two forms which are? - ANSWER
compounding and discounting
how do compounding and discounting differ? - ANSWER compounding is the
calculation of finding the FV while discounting is finding the PV of a future value
what is the one type of future value calculation that can not be made with a calculator? -
ANSWER continuous compounding
what is the equation used for continuous compounding? - ANSWER FV= PV e^IN
so if we have a FV of 1,000 invested at 7% for 100 years with continuous compounding
it can be calculated as? - ANSWER (0.07)(100)= 7 shift e x 1000
there is a positive relationship between the interest rate and future value, meaning when
FV increases when.... - ANSWER interest rates rise....decreases when falls
there is a positive relationship between N and what value - ANSWER future value, the
more periods the larger it grows
there is a negative relationship between interest rates and ? - ANSWER present values,
the present value will get larger as the interest rates fall
cash flow streams are? - ANSWER two or more payments made at different point in
times
an annuity is ? - ANSWER a series of equal annual cash flows
what are the two types of annuities - ANSWER Ordinary annuity and annuity due
an ordinary annuity is - ANSWER a payment that is due at the end, while due is at the
beginning
the amount of money given today is more valuable than the same amount a year from
now due to the ______ of holding the money - ANSWER opportunity cost
the time value of money problems come in two forms which are? - ANSWER
compounding and discounting
how do compounding and discounting differ? - ANSWER compounding is the
calculation of finding the FV while discounting is finding the PV of a future value
what is the one type of future value calculation that can not be made with a calculator? -
ANSWER continuous compounding
what is the equation used for continuous compounding? - ANSWER FV= PV e^IN
so if we have a FV of 1,000 invested at 7% for 100 years with continuous compounding
it can be calculated as? - ANSWER (0.07)(100)= 7 shift e x 1000
there is a positive relationship between the interest rate and future value, meaning when
FV increases when.... - ANSWER interest rates rise....decreases when falls
there is a positive relationship between N and what value - ANSWER future value, the
more periods the larger it grows
there is a negative relationship between interest rates and ? - ANSWER present values,
the present value will get larger as the interest rates fall
cash flow streams are? - ANSWER two or more payments made at different point in
times
an annuity is ? - ANSWER a series of equal annual cash flows
what are the two types of annuities - ANSWER Ordinary annuity and annuity due
an ordinary annuity is - ANSWER a payment that is due at the end, while due is at the
beginning
