QUIZ 2

Question 1

• Whenever the interest charge for any interest period (a year, for example) is based on the remaining principal amount plus any accumulated interest charges up to the beginning of that period, the interest is said to be ___.

Answer 1

compound

Question 2

the calculation of interest on previously earned interest

Answer 2

compounding

Question 3

We should consider the comparison of alternative options, or
proposals, by reducing them to an ___.

Answer 3

equivalent basis

Question 4

The arrows signify cash flows and are placed at the end of the period.
Downward arrows represent ___, and upward arrows represent ___.

Answer 4

1. expenses
2. receipts

Question 5

a series of uniform receipts of amount A occurring at the end of each period for N periods, with interest at i% per period.

Answer 5

annuity

Question 6

annuities starting at the end of the first period

Answer 6

ordinary annuities

Question 7

annuities wherein the cash flow does not begin until some later date

Answer 7

deferred annuity