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Match the Items Below by Entering the Appropriate Code Letter

Question 52

Short Answer

Match the items below by entering the appropriate code letter in the space provided:
A. Compound interest
B. Discount rate
C. Annuity
D. Simple interest
E. Annuity due
F. Ordinary annuity
G. Discount
H. Present value
1. A series of equal payments or receipts
2. Calculated by taking the principal x interest rate x time
3. Also referred to as the effective rate
4. One where the first payment starts at the beginning of the period
5. Calculated based upon interest not only on the principal but also on interest earned
6. One where the first payment is at the end of each period
7. If the bond's contractual rate is less than the market, it will be sold at a ___
8. The discounting of future cash flows is often referred to as the process of determining the ___

Correct Answer:

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1. C
2. D
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