The most basic type of financial transaction involves ________.

a.None of the above

b.a simple, one-time amount of cash that can be either a receipt or a payment

c.an amount of money that is not invested

d.a series of equal installment amounts paid or received over a period of time

If a discount (or interest) rate has a positive value, then the future value of any amount deposited in an interest-bearing account will ________.

a.decline over time

b.be less than the present value

c.be greater than the present value

d.be equal to the present value

If the discount (or interest) rate used to calculate the present value of a future payment increases, the calculated present value will do which of the following?

a.Decrease

b.Remain the same

c.Increase

d.Increase as the period of time shortens

The discount rate that is required to equate a future payment of $500 in three years to a present value of $400 is ________.

a.4.7%

b.6.5%

c.7.7%

d.8.8%

If compounding periods increase in frequency and all else remains the same, the dollar values of any resulting future value calculations will ________.

a.decrease

b.increase

c.None of the above

d.remain the same

Find the future value of $1,800 in 3 years at 8% interest.