Time Value of Money MCQ
Time Value of Money MCQ
Ashish Parikh’s
UNIQUE ACADEMY
2. ` 1000 invested today will become ` 1210 after 2 years @ 10% P.A.
(a) Simple Interest (b) Compounded Annually
(c) Compounded Monthly (d) Compounded quarterly
3. ` 1000 invested today @10% for 3 years compounded annually will become
(a) ` 1300 (b) ` 1331 (c) `1500 (d) None of above
11.Time Value of Money is an important concept in finance because it takes into account:
(a) Risk (b) Time
(c) Compound Interest (d) All of the above
13.Equal Annual Cash Flows occurring at the end of each year for certain period are
known as:
(a) Annuity (b) Perpetuity
(c) Annuity Due (d) Deferred Payments
14.Equal annual amounts occurring in the beginning of certain years are known as:
(a) Annuity (b) Perpetuity
(c) Annuity Due (d) Deferred Payments
17.Future cash flows are converted to present values, so that these can be:
(a) Aggregated (b) Compared
(c) Used in Decision-making (d) All of the above
18.A series of Constant Cash Flows occurring at regular intervals forever is known as:
(a) Growing Annuity (b) Perpetuity
(c) Growing Perpetuity (d) Annuity
20.If the Interest Rate is greater than zero, which of the following series you would prefer
to receive.
Year 1 Year 2 Year 3 Year 4
(a) ` 500 ` 400 ` 300 ` 200
(b) ` 200 ` 300 ` 400 ` 500
(c) ` 350 ` 350 ` 350 ` 350
(d) Any of the above as all are equal in total amount
21.An investor wants to increase the Present Value. The rate of discount applied for
should be:
(a) Increased (b) Decreased
(c) Any of (a) and (b) (d) None of the above
22.If n 1 and Rate of interest > 0, which of the following interest factor is equal to one:
(a) Present Value Factor (b) Compound Value Factor
(c) Present Value Annuity Factor (d) None of the above
23.If Time is ‘n’, Rate of Interest is ‘k’ then 1 k " may be called:
(a) Present Value Factor (b) Compound Value Factor
(c) Compound Value Annuity Factor (d) None of the above
24.In a Loan Repayment Schedule, the interest amount paid each period:
(a) Remained constant (b) Increases
(c) Decreases (d) None of the above
28.A student deposits some amount daily to accumulate ` 5,000 to pay his tuition fees after
one year. Which of the following compounding methods of interest should be opted by
him:
(a) Compounded Quarterly (b) Compounded Daily
(c) Compounded Half-yearly (d) Compounded Annually