A loan is designed as a simple interest loan. This means that the amount of interest paid with each payment will decrease.

A. TRUE B. FALSE

All else equal, the greater the number of compound periods, the greater the PV of an investment.

A. TRUE B. FALSE

A perpetuity is an annuity with an infinite number of payments.

A. TRUE B. FALSE

A disadvantage of a sole proprietor is unlimited liability.

A. TRUE B. FALSE

Preemptive right refers to the idea that common shareholders have limited voting rights in firm decisions.

A. TRUE B. FALSE

The future value of a growing annuity will increase if the growth rate increases.

A. TRUE B. FALSE

The effective annual rate of interest is always greater than the annual percentage rate for any number of compound periods (including yearly).

A. TRUE B. FALSE

A liquidity investor would likely prefer the yield to maturity over the current yield when considering bond investments.

A. TRUE B. FALSE

The TIE ratio measures a firms ability to make interest payments on debt.

A. TRUE B. FALSE

A new investment opportunity costs $1,000 today, and promises to pay $1,500 in exactly two years. This is a good investment if the interest rate is less than 12%.

A. TRUE B. FALSE

The future value of an investment is greater with compound interest rather than simple interest. (all else equal)

A. TRUE B. FALSE

The goal of a disruptive firm is to maximize profits in the short run before going public.

A. TRUE B. FALSE

If a bonds yield to maturity is greater than the coupon rate, we say the bond trades at a discount.

A. TRUE B. FALSE

In the growing annuity formula, the growth rate (g) must be positive.

A. TRUE B. FALSE

You are comparing a 60-month and 84-month car loan. For the same priced car and same APR, you would pay the same interest each month and less principal each month for each loan.

A. TRUE B. FALSE