FIN 101 Chp 4

Marcos is investing $5 today at 7 percent interest so he can have $35 later. This $35 is referred to as the: A. true value. B. future value. C. present value. D. discounted value. E. complex value.

.Which one of the following is a correct statement, all else held constant? A. The present value is inversely related to the future value. B. The future value is inversely related to the period of time. C. The period of time is directly related to the interest rate. D. The present value is directly related to the interest rate. E. The future value is directly related to the interest rate.

The relationship between the present value and the investment time period is best described as: A. direct. B. inverse. C. unrelated. D. ambiguous. E. parallel.

.The present value of a lump sum future amount: A. increases as the interest rate decreases. B. decreases as the time period decreases. C. is inversely related to the future value. D. is directly related to the interest rate. E. is directly related to the time period.

Given an interest rate of zero percent, the future value of a lump sum invested today will always: A. remain constant, regardless of the investment time period. B. decrease if the investment time period is shortened. C. decrease if the investment time period is lengthened. D. be equal to $0. E. be infinite in value

Jamie earned $14 in interest on her savings account last year. She has decided to leave the $14 in her account so that she can earn interest on the $14 this year. The interest earned on last year's interest earnings is called: A. simple interest. B. complex interest. C. accrued interest. D. interest on interest. E. discounted interest.

Lucas expects to receive a sales bonus of $7,500 one year from now. The process of determining how much that bonus is worth today is called: A. aggregating. B. discounting. C. simplifying. D. compounding. E. extrapolating