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Chapter 04
Discounted Cash Flow
Valuation
Multiple Choice Questions
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1.
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An annuity stream of
cash flow payments is a set of:
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A.
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level cash flows occurring each
time period for a fixed length of time.
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B.
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level cash flows occurring each
time period forever.
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C.
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increasing cash flows occurring
each time period for a fixed length of time.
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D.
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increasing cash flows occurring
each time period forever.
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E.
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arbitrary cash flows occurring
each time period for no more than 10 years.
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2.
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Annuities where the
payments occur at the end of each time period are called _____, whereas _____
refer to annuity streams with payments occurring at the beginning of each
time period.
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A.
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ordinary annuities; early
annuities
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B.
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late annuities; straight
annuities
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C.
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straight annuities; late
annuities
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D.
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annuities due; ordinary
annuities
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E.
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ordinary annuities; annuities
due
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3.
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An annuity stream
where the payments occur forever is called a(n):
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D.
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amortized cash flow stream.
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4.
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The interest rate
expressed in terms of the interest payment made each period is called the
_____ rate.
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A.
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stated annual interest
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B.
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compound annual interest
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C.
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effective annual interest
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5.
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The interest rate
expressed as if it were compounded once per year is called the _____ rate.
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6.
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The interest rate
charged per period multiplied by the number of periods per year is called the
_____ rate.
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7.
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Paying off long-term
debt by making installment payments is called:
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A.
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foreclosing on the debt.
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