Quiz Ch 05 – T/F Defining Annuities and Perpetuities
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Any series of uniform, regular cash flows is referred to as an annuity or perpetuity.
True or false: Any series of uniform, regular cash flows is referred to as an annuity or perpetuity.
True or false: The discount factor is employed to assess the present value of receiving $1 in year t.
True or false: With a lower discount rate, the present value of a given amount is reduced.
True or false: Discounting both real and nominal cash flows at the real interest rate is crucial.
True or false: Assuming all else remains constant, more frequent compounding leads to a greater future value.
True or false: The present value is reduced when an annuity is changed into an annuity due.
True or false: Paying a loan more frequently can potentially reduce the annual percentage rate (APR) paid on the loan.
True or false: Comparing cash flows at different times without first discounting them to a common date is not advisable.
True or false: As time passes, in a fixed-rate mortgage, the share of each payment dedicated to interest decreases.
True or false: A perpetuity represents a specialized category within annuities.