Part II. Multiple choice: Clearly mark the best answer on scantron. No partial c
ID: 2785809 • Letter: P
Question
Part II. Multiple choice: Clearly mark the best answer on scantron. No partial credit will be given for these problems. No credit will be given for a question if you do not mark the correct answer on scantron (5 points for each question) 8. Which of the following statements is CORRECT? a. The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. b. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. c. The cash flows for an annuity due must all occur at the ends of the periods. d. The cash flows for an annuity must all be equal, and they must ocur at regular interals,sach e. If some cash flows as once a year or once a month. occur at the beginning of the periods while others occur at the ends,then we have what the textbook defines as a variable annuity 9. Your bank account pays an 8% nominal rate of interest. The interest is compounded Which of the following statements is CORRECT? a. The periodic rate of interest is 2% and the effective rate of interest is 4%. b. The periodic rate of interest is 8% and the effective rate of interest is greater than 8%. The periodic rate of interest is 4% and the effective rate of 8%. interest is less than 8%. c. dic rate of interest is 2% and the effective rate of interest is greater than d. The perio e. The periodic rate of interest is 8% and the effective rate of interest is also 8%. ally. How long will it takeExplanation / Answer
9
8 Sub part Answer Reason a Incorrect Payment occur at the end of period b Incorrect Payments should be regular, need not be yearly, needs to be periodic c Incorrect Payments are at the beginning for annuity due d Correct e Incorrect