公司理财精要第四章题库.docVIP

Chapter 04 Introduction to Valuation: The Time Value of Money ? Multiple Choice Questions? 1.?Martha is investing $5 today at 6 percent interest so she can have $10 later. The $10 is referred to as the:?A.?true value.B.?future value.C.?present value.D.?discounted value.E.?complex value. ? 2.?Tom earned $120 in interest on his savings account last year. Tom has decided to leave the $120 in his account so that he can earn interest on the $120 this year. This process of earning interest on prior interest earnings is called:?A.?discounting.B.?compounding.C.?duplicating.D.?multiplying.E.?indexing. ? 3.?Jamie earned $180 in interest on her savings account last year. She has decided to leave the $180 in her account so that she can earn interest on the $180 this year. The interest Jamie earns this year on this $180 is referred to as:?A.?simple interest.B.?complex interest.C.?accrued interest.D.?interest on interest.E.?discounted interest. ? 4.?Lester had $6,270 in his savings account at the beginning of this year. This amount includes both the $6,000 he originally invested at the beginning of last year plus the $270 he earned in interest last year. This year, Lester earned a total of $282.15 in interest even though the interest rate on the account remained constant. This $282.15 is best described as:?A.?simple interest.B.?interest on interest.C.?discounted interest.D.?complex interest.E.?compound interest. ? 5.?By definition, a bank that pays simple interest on a savings account will pay interest:?A.?only at the beginning of the investment period.B.?on interest.C.?only on the principal amount originally invested.D.?on both the principal amount and the reinvested interest.E.?only if all previous interest payments are reinvested. ? 6.?Sue needs to invest $3,626 today in order for her savings account to be worth $5,000 six years from now. Which one of the following terms refers to the $3,626??A.?Present valueB.?Compound valueC.?Future valueD.?C