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| 1 | |
Maturity value is equal to principal plus interest. |
| | A) | True |
| | B) | False |
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| 2 | |
The value of an annuity is the series of payment and interest. |
| | A) | True |
| | B) | False |
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| 3 | |
An ordinary annuity results in the deposit or payment being made at end of the period. |
| | A) | True |
| | B) | False |
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| 4 | |
The same table can be used to find value of annuity due if 2 extra periods are added along with the subtraction of one payment. |
| | A) | True |
| | B) | False |
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| 5 | |
Sinking funds accumulate money in the present to accumulate a specific sum at a predetermined present date. |
| | A) | True |
| | B) | False |
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| 6 | |
An annuity is: |
| | A) | Not used by lotteries today |
| | B) | A one time payment |
| | C) | A stream of payments |
| | D) | Never made up of equal payments |
| | E) | None of the above |
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| 7 | |
Ordinary annuity payments are made: |
| | A) | At end of the period |
| | B) | Yearly |
| | C) | Monthly |
| | D) | At beginning of the period |
| | E) | None of the above |
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| 8 | |
Annuity due compared to ordinary annuity results in a: |
| | A) | Higher value |
| | B) | Lower value |
| | C) | Same value |
| | D) | Value 3 times the annuity due |
| | E) | None of the above |
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| 9 | |
Payments in annuities must be made: |
| | A) | Daily |
| | B) | Quarterly |
| | C) | Semiannually |
| | D) | Yearly |
| | E) | None of the above |
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| 10 | |
The present value of an ordinary annuity: |
| | A) | Tells how much money we need to invest in the future |
| | B) | Is a lump sum |
| | C) | Can only be calculated manually |
| | D) | Indicates how much money needs to be invested today |
| | E) | None of the above |
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| 11 | |
A sinking fund: |
| | A) | Requires at the beginning one lump sum payment |
| | B) | Is really not an annuity |
| | C) | Aids in meeting a future obligation |
| | D) | Does not compound its money |
| | E) | None of the above |
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| 12 | |
Bill Martin invests $6,000 at the end of each year for 10 years. The rate of interest Bill gets is 12 percent annually. The final value of Bill's investment at the of the 10th year on this ordinary annuity: (Use the tables in the handbook) |
| | A) | $88,656.00 |
| | B) | $33,900.00 |
| | C) | $88,566.00 |
| | D) | $105,292.20 |
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| 13 | |
Mellisa Co. borrowed money that is to be repaid in 7 years. So that the loan will be paid back at the end of the 7th year, the company invests $12,000 at the end of each year at 12 percent compounded annually. The amount of original loan was: (Use the tables in the handbook) |
| | A) | $54,766 |
| | B) | $121,068 |
| | C) | $121,680 |
| | D) | $54,678 |
| | E) | None of the above |
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| 14 | |
Jill Frost wants to know how much must be deposited in her local bank today so that she would receive yearly payments of $25,000 for 10 years at a current rate of 11 percent compound annually. (Use the tables in the handbook) |
| | A) | $147,230 |
| | B) | $174,522 |
| | C) | $419,300 |
| | D) | $138,425 |
| | E) | None of the above |
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| 15 | |
Dick Ruth invests $1,200 at beginning of each year for 7 years into an account that pays 14 percent compounded semiannually. The value of the annuity due is: (Use the tables in the handbook) |
| | A) | $27,060.00 |
| | B) | $25,860.00 |
| | C) | $27,931.20 |
| | D) | $26,731.20 |
| | E) | None of the above |
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