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If the amount invested (present value) is doubled, then the future value will be_________doubled

exactly

If the interest rate is doubled for a one-period investment, then the total amount of interest earned will be ___________doubled.

exactly

If the interest rate is doubled for a multi-period investment, then the total amount of interest earned will be_______ _______ doubled.

more than

the future value is ______ related to time.

directly

the future value is ______ related to the interest rate.

directly

The present value of a lump sum is _______ related to time.

inversely

the present value is _______ related to the discount rate.

inversely

The present value interest factor is ______ related to the future value interest factor.

inversely

The present value of an annuity due is _____ ______ the future value of the same ordinary annuity.

greater than

The future value of an annuity due is _____ _____ the future value of the same ordinary annuity.

greater than

A fully amortizing loan will have a ________ payment amount. The amount of the principal reduction included i each payment will ________ as the amount of interest charged ___________ because the loan balance declines.

constant, increase, decrease

Compounding causes the amount of interest earned each period on an investment to _______.

increase

The present value of a two-period annuity due is ____ _____ the present value of the same annuity if it were an ordinary annuity.

more than

If a loan amount is doubled, then the payment amount will be ______ doubled.

exactly

To accumulate a certain future value of an annuity, if an annual ordinary annuity payment is made on a monthly basis instead of annually, the monthly payment will be ____ _____ one twelfth of the annual payment.

less than

The total interest paid over the life of a 30-year loan will be ____ ____ double the total interest paid over the life of an otherwise identical 15-year loan.

more than

For a given APR, the APY is _____ related to the number of compounding periods within the year.

directly

A bond's price is ______ inversely related to the changes i the investor's required rate of return.

inversely

the market value of a bond will be _____than the par value (it will sell at a _______) if the investor's required rate of return is above the coupon rate.

less, discount

____-term bonds have greater interest rate risk than do _____-term bonds.

long, shorter

the price of a bond and its YTM are _____ related.

inversely

The_____ the maturity of a bond, the greater its interest sensitivity.

longer

Interest rate risk and reinvestment risk are_____.

competitive

Premium bonds have a YTM that is _____than the coupon rate.

<

The higher the required rate of return, the ____ the bond's price.

lower

The higher the investor's tax bracket, the _______ the pre-tax equivalent yield for a given muni yield.

higher

the yield curve is a graph of __ __ __ versus ______. Longer maturities typically correspond to ____ rates (the term structure is ______ sloping)

rates of return, maturity, higher, upward

About this deck

Author: John L.

Textbook: Fundamentals of Corporate Finance Standard Edition

Created: 2013-09-22

Updated: 2013-09-23

Size: 27 flashcards

Views: 21

Textbook: Fundamentals of Corporate Finance Standard Edition

Created: 2013-09-22

Updated: 2013-09-23

Size: 27 flashcards

Views: 21

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