FINANCE 301 Final Exam Rated A+ | 100
Questions all with 100% Correct Answers
The Jones Brothers recently established a trust fund that will provide annual
scholarships of $12,000 indefinitely. These annual scholarships are:
1)
_______
A)
amortized payments.
B)
an ordinary annuity.
C)
a perpetuity.
D)
a perpetuity due.
E)
an annuity due. - ANSWER a perpetuity.
Lee pays 1 percent per month interest on his credit card account. When his monthly
rate is multiplied by 12, the resulting answer is referred to as the:
2)
_______
A)
effective annual rate.
B)
compounded rate.
,C)
simple rate.
D)
annual percentage rate.
E)
perpetual rate. - ANSWER annual percentage rate
All else held constant, the present value of an annuity will decrease if you:
3)
_______
A)
increase the time period.
B)
decrease the annuity payment.
C)
increase the payment amount.
D)
increase the annuity's future value.
E)
decrease the discount rate. - ANSWER decrease the annuity payment
Which statement is true?
4)
_______
,A)
All else equal, an increase in the number of annuity payments decreases the present
value and increases the future value of an annuity.
B)
All else equal, an ordinary annuity is more valuable than an annuity due.
C)
All else equal, a decrease in the number of payments increases the future value of an
annuity due.
D)
An annuity with payments at the beginning of each period is called an ordinary annuity.
E)
All else equal, an increase in the discount rate decreases the present value and
increases the future value of an annuity. - ANSWER All else equal, an increase in the
discount rate decreases the present value and increases the future value of an annuity
Which one of these is a perpetuity?
5)
_______
A)
Car payment of $260 a month for 60 months
B)
Rental payment of $800 a month for one year
C)
Trust income of $1,200 a year forever
D)
Lottery winnings of $1,000 a month for life
, E)
Retirement pay of $2,200 a month for 20 years - ANSWER Trust income of $1,200 a year
forever
Which one of the following can be classified as an annuity but not as a perpetuity?
6)
_______
A)
Equal annual payments for life
B)
Increasing quarterly payments for six years
C)
Unequal payments each year for nine years
D)
Increasing monthly payments forever
E)
Equal weekly payments forever - ANSWER Equal annual payments for life
Assume all else is equal. When comparing savings accounts, you should select the
account that has the:
7)
_______
Questions all with 100% Correct Answers
The Jones Brothers recently established a trust fund that will provide annual
scholarships of $12,000 indefinitely. These annual scholarships are:
1)
_______
A)
amortized payments.
B)
an ordinary annuity.
C)
a perpetuity.
D)
a perpetuity due.
E)
an annuity due. - ANSWER a perpetuity.
Lee pays 1 percent per month interest on his credit card account. When his monthly
rate is multiplied by 12, the resulting answer is referred to as the:
2)
_______
A)
effective annual rate.
B)
compounded rate.
,C)
simple rate.
D)
annual percentage rate.
E)
perpetual rate. - ANSWER annual percentage rate
All else held constant, the present value of an annuity will decrease if you:
3)
_______
A)
increase the time period.
B)
decrease the annuity payment.
C)
increase the payment amount.
D)
increase the annuity's future value.
E)
decrease the discount rate. - ANSWER decrease the annuity payment
Which statement is true?
4)
_______
,A)
All else equal, an increase in the number of annuity payments decreases the present
value and increases the future value of an annuity.
B)
All else equal, an ordinary annuity is more valuable than an annuity due.
C)
All else equal, a decrease in the number of payments increases the future value of an
annuity due.
D)
An annuity with payments at the beginning of each period is called an ordinary annuity.
E)
All else equal, an increase in the discount rate decreases the present value and
increases the future value of an annuity. - ANSWER All else equal, an increase in the
discount rate decreases the present value and increases the future value of an annuity
Which one of these is a perpetuity?
5)
_______
A)
Car payment of $260 a month for 60 months
B)
Rental payment of $800 a month for one year
C)
Trust income of $1,200 a year forever
D)
Lottery winnings of $1,000 a month for life
, E)
Retirement pay of $2,200 a month for 20 years - ANSWER Trust income of $1,200 a year
forever
Which one of the following can be classified as an annuity but not as a perpetuity?
6)
_______
A)
Equal annual payments for life
B)
Increasing quarterly payments for six years
C)
Unequal payments each year for nine years
D)
Increasing monthly payments forever
E)
Equal weekly payments forever - ANSWER Equal annual payments for life
Assume all else is equal. When comparing savings accounts, you should select the
account that has the:
7)
_______
