Module 4 Flashcards
1
Q
Which of the following statements regarding serial payments and fixed annuity payments is CORRECT?
A)
The last serial payment will be less than the respective fixed annuity payment.
B)
The last serial payment will have less purchasing power than the first serial payment.
C)
Serial payments are similar to fixed annuities in that they both pay out a fixed amount each year.
D)
A serial payment is a payment that increases at some constant rate on a regular basis.
A
D)
A serial payment is a payment that increases at some constant rate on a regular basis.
2
Q
What would the inflation-adjusted interest rate be with a 6% rate of return and a 2.5% inflation rate (rounded to two decimal places)?
A) 3.41% B) 0.97% C) 2.40% D) 1.03%
A
A)
3.41%
