multiple choice 1 the future value of an amount is the value of that amount at a the 4352153

 

MULTIPLE CHOICE

1.The future value of an amount is the value of that amount at

a.the present date

b.an unknown date

c.a future date

d.any given date

2.The amount earned that represents the difference between the future value and present value of a single investment is called

a.its cost

b.an annuity

c.an apportionment

d.interest

3.Which of the following will INCREASE future value relative to present value?

a.higher interest rate

b.shorter period

c.more safety

d.less risk

4.The difference between the future value and present value of an amount is

a.interest

b.cash invested

c.cash plus interest

d.cash less interest

5.Earning interest in one period on interest earned in an earlier period is known as

a.simple interest

b.compound interest

c.combined interest

d.double interest

6.A series of equal amounts received or paid over a specified number of equal time periods is known as an

a.investment

b.apportionment

c.annuity

d.interest rate

7.Which of the following is TRUE concerning the future value of an investment?

a.the difference between the future and present value of an investment is the annuity value

b.the future value of an investment is expected to be larger than its present value

c.the future value of an investment is expected to be smaller than its present value

d.the future value of an investment is always smaller than its present value

8.If you invested $1,000 in a savings account today, how much would you have one year from now if the bank pays 7% interest?

a.$1,700

b.$1,070

c.$1,007

d.$1,000

9.Your daughter received a tax refund and immediately and wished to put the money into a savings account at the local bank. She asked you how much she would accumulate if she invested the entire amount in the bank for exactly two years. What information would you need in order to correctly answer her question?

Amount               How often bank

Interest Rate     placed in savings     compounds interest

a.yes                     yes                            no

b.yes                     no                              no

c.yes                     no                              yes

d.yes                     yes                             yes

10.Which of the following formulas correctly represents the calculation of the future amount of an investment of $500 that was earning interest at 7% annually for 3 years?

a.$500(1.07)(1.07)(1.07)

b.$500(1.07)(3)

c.3($500) × .07

d.(1.07 × 3)$500

Posted in Uncategorized