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Fin100-Quiz4

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* Question 1
0 out of 2 points | | | The interest rate that measures the true interest rate when compounding occurs more frequently than once a year is called the:Answer | | | | | Selected Answer: | compound rate of interest | Correct Answer: | effective annual rate | | | | | * Question 2
0 out of 2 points | | | The rate of interest actually paid or earned, also called the annual percentage rate (APR), is the ________ interest rate.Answer | | | | | Selected Answer: | nominal. | Correct Answer: | effective. | | | | | * Question 3
0 out of 2 points | | | When the amount earned on a deposit has become part of the principal at the end of a specified time period the concept is calledAnswer | | | | | Selected Answer: | future value. | Correct Answer: | compound interest. | | | | | * Question 4
2 out of 2 points | | | The present value of a $20,000 perpetuity at a 7 percent discount rate isAnswer | | | | | Selected Answer: | $285,714. | Correct Answer: | $285,714. | | | | | * Question 5
0 out of 2 points | | | For a given interest rate, as the length of time until receipt of the funds increases, the present value interest factorAnswer | | | | | Selected Answer: | increases. | Correct Answer: | decreases. | | | | | * Question 6
2 out of 2 points | | | If $1,000 were invested now at a 12% interest rate compounded annually, what would be the value of the investment in two years?Answer | | | | | Selected Answer: | $1,254 | Correct Answer: | $1,254 | | | | | * Question 7
2 out of 2 points | | | The future value of $200 received today and deposited at 8 percent for three years isAnswer | | | | | Selected Answer: | $252. | Correct Answer: | $252. | | | | | * Question 8
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