Chapter 6

The simple interest rate charged per period multiplied by the number of payment periods per year gives the:

The annual percentage rate (APR) is defined as the simple interest charged per period multiplied by the number of periods per year.

The future value of an annuity is typically used when analyzing:

The future value of an annuity is typically used when analyzing retirement or pension plans with constant contributions.

A typical present value of an annuity formula assumes that:

A typical present value of an annuity formula assumes that cash flows occur at the end of the period

Which of the following equations is correct? Annuity due value = Ordinary annuity value / i Annuity due value = Ordinary annuity value + (1+i) Annuity due value = Ordinary value × (1+i) Annuity due value = Ordinary annuity value / (1+i)

Annuity due value = Ordinary annuity value × (1+i)

Which of the following interest rates is annualized using simple interest?

The annual percentage rate (APR) is the annualized interest rate using simple interest.

A modern day example of a perpetuity is a:

The most important perpetuities in the securities markets today are preferred stock issues.