How are future values affected by changes in interest rates?
Multiple Choice
•
Future values are not affected by changes in interest rates.
•
One would need to know the present value in order to determine the impact.
•
The higher the interest rate, the larger the future value will be.
Correct
•
The lower the interest rate, the larger the future value will be.
An average home in Chicago costs $295,000. If house prices are expected to grow
at an average rate of 3 percent per year, what will a house cost in five years?
Multiple Choice
•
$341,985.85
•
$338,941.27
•
$347,028.19
•
$328,995.61
Which of the following statements is incorrect with respect to time lines?
Multiple Choice
•
Cash flows we pay out are called outflows and designated with a negative number.
•
A helpful tool for organizing our analysis is the time line.
•
Interest rates are not included on our time lines.
Correct
•
Cash flows we receive are called inflows and denoted with a positive number.
When your investment compounds, your money will grow in a(n) __________
fashion.
Multiple Choice
•
implied
•
static
•
linear
•
exponential Correct
With regard to money deposited in a bank, future values are
Multiple Choice
•
