Effective and nominal interest rates are equal, when the interest is compounded__________________?

Related Mcqs:

1. Nominal and effective interest rates are equal, when the interest is compounded______________?

   A. Quarterly
   B. Semi-annually
   C. Annually
   D. In no case, they are equal

2. The amount of simple interest during ‘n’ interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?

   A. p.i.n.
   B. p(1 + i.n)
   C. p(1 + i)n
   D. p(1 – i.n)

3. An annuity is a series of equal payments occuring at equal time intervals, and this amount includes the sum of all payments plus interest, if allowed to accumulate at a definite rate of interest from the time of initial payment to the end of annuity term. Ordinary annuity is used in the calculation of the__________________?

   A. Manufacturing cost
   B. Depreciation by sinking fund method
   C. Discrete compound interest
   D. Cash ratio

4. If ‘S’ is the amount available after ‘n’ interest periods for an initial principal ‘P’ with the discrete compound interest rate ‘i’, the present worth is given by__________________?

   A. (1 + i)n/S
   B. S/(1 + i)n
   C. S/(1 + in)
   D. S/(1 + n)i

5. The amount of compounded interest during ‘n’ interest periods is_________________?

   A. p[(1+i)n – 1)]
   B. p(1 + i)n
   C. p(1 – i)n
   D. p(1 + in)

6. A series of equal payments (e.g., deposit or cost) made at equal intervals of time is known as __________________?

   A. Perpetuity
   B. Capital charge factor
   C. Annuity
   D. Future worth

7. ________________ of depreciation calculation does not take into account the interest on investments?

   A. Present worth method
   B. Sinking fund method
   C. Sum of the years-digits method
   D. All A, B. and C.

8. _________________ of depreciation calculation accounts for the interest on investment?

   A. Straight line method
   B. Declining balance
   C. Both A. and B.
   D. Neither A. nor B.

9. An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be ________________?

   A. 1000 (1 + 0.1/4)20
   B. 1000 (1 + 0.1)20
   C. 1000 (1 + 0.1/4)5
   D. 1000 (1 + 0.1/2)5

10. If the interest rate of 10% per period is compounded half yearly, the actual annual return on the principal will be ______________ percent ?

    A. 10
    B. 20
    C. > 20
    D. < 20