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- Introduction to Corporate FinanceFinancial Statements,Taxes,and Cash FlowWorking With Financial StatementsLong-Term Financial Planning and GrowthIntroduction to Valuation: The Time Value of MoneyDiscounted Cash Flow ValuationInterest Rates and Bond ValuationStock ValuationNet Present Value and Other Investment CriteriaMaking Capital Investment DecisionsProject Analysis and EvaluationSome Lessons From Capital Market HistoryReturn,Risk,and the Security Market LineCost of CapitalRaising CapitalFinancial Leverage and Capital Structure PolicyDividends and Payout PolicyShort-Term Finance and PlanningCash and Liquidity ManagementCredit and Inventory ManagementInternational Corporate FinanceBehavioral Finance: Implications for Financial ManagementEnterprise Risk ManagementOptions and Corporate FinanceOption ValuationMergers and AcquisitionsLeasing

Question 1

Free

Multiple Choice

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future value

present value

principal amounts

discounted value

invested principal

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Question 2

Free

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simplifying

compounding

aggregation

accumulation

discounting

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Question 3

Free

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free interest.

bonus income.

simple interest.

interest on interest.

present value interest.

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Question 4

Free

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free interest.

dual interest.

simple interest.

interest on interest.

compound interest.

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Question 5

Free

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free interest

complex interest

simple interest

interest on interest

compound interest

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Question 6

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single amount

future value

present value

simple amount

compounded value

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Question 7

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growth analysis.

discounting.

accumulating.

compounding.

reducing.

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Question 8

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current yield

effective rate

compound rate

simple rate

discount rate

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Question 9

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compound interest valuation

interest on interest computation

discounted cash flow valuation

present value interest factoring

complex factoring

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Question 10

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Barb will earn more interest the first year than Andy will.

Andy will earn more interest in year three than Barb will.

Barb will earn interest on interest.

After five years, Andy and Barb will both have earned the same amount of interest.

Andy will earn compound interest.

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Question 11

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Sue will have less money when she retires than Neal.

Neal will earn more interest on interest than Sue.

Neal will earn more compound interest than Sue.

If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings.

Sue will have more money than Neal as long as they retire at the same time.

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Question 12

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Samantha deposited more than $5,600 this morning.

The present value of Samantha's account is $5,600.

Samantha could have deposited less money and still had $5,600 in five years if she could have earned 5.5 percent interest.

Samantha would have had to deposit more money to have $5,600 in five years if she could have earned 6 percent interest.

Samantha will earn an equal amount of interest every year for the next five years.

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Question 13

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The interest you earn six years from now will equal the interest you earn ten years from now.

The interest amount you earn will double in value every year.

The total amount of interest you will earn will equal $1,000 × .06 × 40.

The present value of this investment is equal to $1,000.

The future value of this amount is equal to $1,000 × (1 + 40)^{.06}.

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Question 14

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remains constant

increases

decreases

becomes negative

cannot be determined from the information provided

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Question 15

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The present values of Luis and Soo Lee's monies are equal.

In future dollars, Soo Lee's money is worth more than Luis' money.

In today's dollars, Luis' money is worth more than Soo Lee's.

Twenty years from now, the value of Luis' money will be equal to the value of Soo Lee's money.

Soo Lee's money is worth more than Luis' money given the 7 percent discount rate.

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Question 16

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present value.

future value.

interest rate.

time.

There is no exponent in the present value formula.

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Question 17

Multiple Choice

I)Invest in a different account paying a higher rate of interest.

II)Invest in a different account paying a lower rate of interest.

III)Retire later.

IV)Retire sooner.

Choose correct answer/s

I only

II only

I and III only

I and IV only

II and III only

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Question 18

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6 percent interest for five years

6 percent interest for eight years

6 percent interest for ten years

8 percent interest for five years

8 percent interest for ten years

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Question 19

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The present value and future value factors are equal to each other.

The present value factor is the exponent of the future value factor.

The future value factor is the exponent of the present value factor.

The factors are reciprocals of each other.

There is no relationship between these two factors.

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Question 20

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Martin earned simple interest rather than compound interest.

Martin earned a lower interest rate than he expected.

Martin did not earn any interest on interest as he expected.

Martin ignored the Rule of 72 which caused his account to decrease in value.

The future value interest factor turned out to be higher than Martin expected.

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