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# Introduction to Corporate Finance Study Set 2

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## Quiz 2 : A Review of Financial Mathematics

What simple interest rate per year will give same future value at the end of 3 years as 10% p.a.compounded semi- annually?
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Answer:

B

What is the future value of a $1,000 invested for 20 years at an interest rate of 10% p.a.compounded quarterly? Free Multiple Choice Answer: Answer: A What is the present value of the following set of cash flows when the discount rate is 12% p.a.compounded monthly? Free Multiple Choice Answer: Answer: A What is the present value of a perpetuity consisting of payments of$500 with an interest rate of 10% p.a.?
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What is the present value of an annuity consisting of 5 annual payments of $200 with an interest rate of 8% p.a.compounded annually and the first payment made immediately? Multiple Choice Answer: The future value in 10 years of$1,000 invested at a 10% p.a.compounded annually interest rate will be _____________ the future value in 10 years of $1,000 invested at a 10% p.a.simple interest rate. Multiple Choice Answer: At the end of a 5- year period,the difference between the future value of$200 invested at 8% p.a.simple interest and $200 invested at 8% p.a.compounded annually interest will be _______________ Multiple Choice Answer: Which of the following statements is true? Multiple Choice Answer: What is X in the formula X = PV(1 + r)? Multiple Choice Answer: What is the future value of$2,500 invested for 3 years at an interest rate of 11% p.a.compounded semi- annually?
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Asset A provides a cash flow of $100 in six years' time.Asset B provides a cash flow of$100 in four years' time.Which asset would a rational investor rather own?
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Which of the following will yield the highest future value at the end of 5 years?
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What is the future value of $500 invested for 4 years at a simple interest rate of 5% p.a.? Multiple Choice Answer: What is the future value of$3,400 invested for 7 years at a simple interest rate of 7.5% p.a.?
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What does the equation, (1 + r/m)m - 1,calculate?
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What is the present value of an annuity due consisting of 5 annual payments of $1,000 with an interest rate of 8% p.a. ,with the first payment occurring in 5 years' time? Multiple Choice Answer: What is the future value of$20 invested for 80 years at an annually compounded interest rate of 7% p.a.?
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What is the value of a share which is expected to pay a dividend of $0.11 every six months forever,on the basis that you intend to hold the shares forever,and the Australian ten- year bond rate today is 7.29%? Multiple Choice Answer: What is the present value of$1,800 to be received in 1 year when the discount rate is 9.5% p.a.?
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Which of these answers best describes an ordinary annuity?
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