Money Banking and Financial Markets Stephen Cecchetti 5th edition – Test bank
Chapter 04
Future Value, Present Value and Interest Rates
Multiple-Choice Questions
1. A promise of a $100 payment to be received one year from today is:
a. more valuable than receiving the payment today.
b. less valuable than receiving the payment two years from now.
c. equally valuable as a payment received today if the interest rate is zero.
d. not enough information is provided to answer the question.
Ans: C
Difficulty: 02 Medium
Learning Objective: 04-01
AACSB: Reflective Thinking
Blooms: Understand
Topic: Valuing Monetary Payments Now and in the Future
2. The future value of $100 at a 5% per year interest rate at the end of one year is:
a. $95.00
b. $105.00
c. $97.50
d. 107.50
Ans: B
Difficulty: 03 Hard
Learning Objective: 04-01
AACSB: Knowledge Application
Blooms: Apply
Topic: Valuing Monetary Payments Now and in the Future
3. Credit:
a. probably came into being at the same time as coinage.
b. predates coinage by 2,000 years.
c. did not exist until the middle ages.
d. first became popular due to the writings of Aristotle.
Ans: B
Difficulty: 01 Easy
Learning Objective: 04-01
AACSB: Reflective Thinking
Blooms: Remember
Topic: Valuing Monetary Payments Now and in the Future
4. Which of the following expresses 5.65%?
a. 0.565
b. 0.00565
c. 5.65
d. 0.0565
Ans: D
Difficulty: 01 Easy
Learning Objective: 04-01
AACSB: Reflective Thinking
Blooms: Remember
Topic: Valuing Monetary Payments Now and in the Future
5. Which of the following expresses 4.85%?
a. 0.0485
b. 4.850
c. 0.00485
d. 0.485
Ans: A
Difficulty: 01 Easy
Learning Objective: 04-01
AACSB: Reflective Thinking
Blooms: Remember
Topic: Valuing Monetary Payments Now and in the Future
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