General Principles Ch 4

Question 1

The amount of money deposited (generally) or received, when an investment or loan begins

Answer 1

Present value

Question 2

Financial calculators will not work unless at least ________ of the following five values are inputted:
N, I/YR, PV, PMT, FV.

Answer 2

3

Question 3

Present value PV is almost always a negative input, except for ________.

Answer 3

Amortization

Question 4

The _________ applies to compounded interest rates and is reasonably accurate for interest rates that fall in the range of 6% and 10%.

Answer 4

Rule of 72

Question 5

______ is determined by multiplying the daily interest rate by the principal amount, and by the number of days that a lapse between payments.

Answer 5

Simple interest

Question 6

_______ is calculated on both of the initial principal and the accumulated interest of previous periods of a deposit.

Answer 6

Compound interest

Question 7

The inflation adjusted interest rate is the ________.

Answer 7

Real rate of return

Question 8

Real rate of return

Answer 8

{[(1 + after-tax return)/(1+inflation rate)] - 1} *100

Question 9

If net present value is positive, the internal rate of return is _______ the required rate of return.

Answer 9

Greater than

Question 10

If net present value is negative the internal rate of return is _______ the required rate of return.

Answer 10

Less than

Question 11

If net present value is zero, the internal rate of return is _______ the required rate of return.

Answer 11

Equal to