1. Interest rates are given as annual rates. If semiannual (twice a year) compou

Question

1. Interest rates are given as annual rates. If semiannual (twice a year) compounding is being used, then you would make the following adjustments: (Points : 1)       Double the rate and double the number of years.
      Double the rate and halve the number of years.
      Halve the rate and halve the number of years.
      Halve the rate and double the number of years.

Question 2. 2. $10,000 will be received exactly 10 years from today. The following statement is true: (Points : 1)       If the interest rate increases, so does the present value of the $10,000.
      If the interest rate increases, the present value of the $10,000 decreases.
      It is worth $10,000 today.
      It will have a present value greater than $10,000.

Explanation / Answer

1. C

2. B

3. B

4. A

5.A

6.D

7.A

8. D

9. C

10. B

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