Ch 4 - Time Value of Money: Valuing Cash Flow Streams

Question 1

stream of cash flows

Answer 1

a series of cash flows lasting several periods

Question 2

perpetuity

Answer 2

A stream of equal cash flows that occurs at regular intervals and lasts forever.

Question 3

consol

Answer 3

A bond that promises its owner a fixed cash flow every year,forever.

Question 4

annuity

Answer 4

A stream of equal cash flows arriving at a regular interval and ending after specified time period.

Question 5

growing perpetuity

Answer 5

A stream of cash flows that occurs at regular intervals and grows at a constant rate forever

Question 6

growing annuity

Answer 6

A stream of cash flows, growing at a constant rate and paid at regular intervals,that end after a specified number of periods