Fin 300 Chapter 5
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Interest on interest increase every year.
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True
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False
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We will get 100 on our test!
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- 2.
Simple interest earned each year on an investment remains constant.
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True
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False
Correct Answer
A. True -
- 3.
The process of converting the initial amount into future value is called:
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Discounting
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Compounding
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Both A and B
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Future conversion
Correct Answer
A. Compounding -
- 4.
The more frequently interest payments are compounded, the larger the future value of $1 for a given time period.
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True
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False
Correct Answer
A. True -
- 5.
The growth in the future value over time is linear.
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True
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False
Correct Answer
A. FalseExplanation
The growth in the future value over time is not linear, but exponential.Rate this question:
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- 6.
What is the future value of $5,000 invested for 10 years at 15 percent interest. Also, what is the simple interest and interest on interest for the 10 year period.
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20, 227.29 ; $7,500 ; $12,727.79
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$20, 227.29 ; $7,500 ; $ 7,727.79
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$20,227.79 ; $12,500 ; $ 7,727.79
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Cannot be determined
Correct Answer
A. $20, 227.29 ; $7,500 ; $ 7,727.79 -
- 7.
Compounded interest are composed of:
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Interest on Interest
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Simple interest
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Interest on Interest and Simple interest
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Time value of money
Correct Answer
A. Interest on Interest and Simple interest -
- 8.
Say you leave $100 invested in the bank savings account at 10 percent interest for five years. What is the simple interest and the interest on interest for the five year period?
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$50 ; $61.05
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$61.05 ; $61.05
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$50 ; $11.05
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$161.05
Correct Answer
A. $50 ; $11.05 -
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Mar 21, 2022Quiz Edited by
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Mar 06, 2010Quiz Created by
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