Chapter 04 - Discounted Cash Flow Valuation 4-1 Chapter 04 Discounted Cash Flow Valuation Answer Key Mu ltiple Choice Qu estions 1. An annuity stream of cash flow payments is a set of: A. level cash flows occurring each time period for a fixed length of time. B. level cash flows occurring each time period forever. C. increasing cash flows occurring each time period for a fixed length of time. D. increasing cash flows occurring each time period forever. E. arbitrary cash flows occurring each time period for no more than 10 years. Difficulty level: Easy Topic: ANNUITY Type: DEFINITIONS 2. Annuities where the payments occur at the end of each time period are called _____, whereas _____ refer to annuity streams with payments occurring at the beginning of each time period. A. ordinary annuities; early annuities B. late annuities; straight annuities C. straight annuities; late annuities D. annuities due; ordinary annuities E. ordinary annuities; annuities due Difficulty level: Easy Topic: ANNUITIES DUE Type: DEFINITIONS Chapter 04 - Discounted Cash Flow Valuation 4-2 3. An annuity stream where the payments occur forever is called a(n): A. annuity due. B. indemnity. C . perpetuity. D. amortized cash flow stream. E. amortization table. Difficulty level: Easy Topic: PERPETUITY Type: DEFINITIONS 4. The interest rate expressed in terms of the interest payment made each period is called the _____ rate. A . stated annual interest B. compound annual interest C. effective annual interest D. periodic interest E. daily interest Difficulty level: Easy Topic: STATED INTEREST RATES Type: DEFINITIONS 5. The interest rate expressed as if it were compounded once per year is called the _____ rate. A. stated interest...
