Question 1
What does 'opportunity cost' mean in the context of TVM?
Question 2
What is the mathematical formula for calculating future value (FV)?
Question 3
How do you calculate present value (PV)?
Question 4
What does the effective annual interest rate (EAR) account for that the nominal rate does not?
Question 5
Which premium compensates investors for the potential risk of default?
Question 6
Which of the following is NOT a component of interest rates?
Question 7
In calculating the effective annual rate (EAR), what does 'm' represent?
Question 8
What function on a financial calculator is used to compute the future value of an investment?
Question 9
What is the effective annual rate if the nominal rate is 10% and compounded quarterly?
Question 10
Given $500 today at 7% interest for 5 years, what is the future value?
Question 11
How does an annuity due differ from an ordinary annuity?
Question 12
Why is it better to have a thousand dollars today than in five years?
Question 13
What does the 'required rate of return' represent?
Question 14
If $200/year is saved for 8 years at an 11% return, what is the future value?
Question 15
What is the importance of compounding in TVM?