IFM11 TB Ch28
(Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard)
Please see the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines.
Multiple Choice: True/False
(28.2) Compounding F J Answer: a EASY
1. Starting to invest early for retirement increases the benefits of compound interest.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
2. Starting to invest early for retirement reduces the benefits of compound interest.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
3. A time line is meaningful even if all cash flows do not occur annually.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
4. A time line is not meaningful unless all cash flows occur annually.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
5. Time lines can be constructed in situations where some of the cash flows occur annually but others occur quarterly.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
6. Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
7. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
8. Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
9. Some of the cash flows shown on a time line can be in the form of annuity payments while others can be uneven amounts.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
10. Some of the cash flows shown on a time line can be in the form of annuity payments but none can be uneven amounts.
a. True
b. False
(28.3) PV versus FV C J Answer: b EASY
11. If the discount (or interest) rate is positive, the present value of an expected series of payments will always exceed the future
Please see the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines.
Multiple Choice: True/False
(28.2) Compounding F J Answer: a EASY
1. Starting to invest early for retirement increases the benefits of compound interest.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
2. Starting to invest early for retirement reduces the benefits of compound interest.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
3. A time line is meaningful even if all cash flows do not occur annually.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
4. A time line is not meaningful unless all cash flows occur annually.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
5. Time lines can be constructed in situations where some of the cash flows occur annually but others occur quarterly.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
6. Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
7. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
8. Time lines cannot be constructed for annuities unless all the payments occur at the end of the periods.
a. True
b. False
(28.2) Compounding F J Answer: a EASY
9. Some of the cash flows shown on a time line can be in the form of annuity payments while others can be uneven amounts.
a. True
b. False
(28.2) Compounding F J Answer: b EASY
10. Some of the cash flows shown on a time line can be in the form of annuity payments but none can be uneven amounts.
a. True
b. False
(28.3) PV versus FV C J Answer: b EASY
11. If the discount (or interest) rate is positive, the present value of an expected series of payments will always exceed the future