The Values Shown in Ordinary Annuity Tables (Either Present Value

question 4

Multiple Choice

The values shown in ordinary annuity tables (either present value or compound value) can be adjusted to the
Annuity due form by the ordinary annuity interest factor by .

• A)dividing, (1 + i)
• B)dividing, (1 + i)ⁿ
• C)multiplying, (1 + i)
• D)multiplying, (1 + i)ⁿ

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for securities, loans, and deposits.

Coupon Rate

The interest rate on a bond, representing the annual interest payment made by the bond issuer relative to the bond's face value.

Amortization

The gradual reduction of a debt or the spreading out of the cost of an intangible asset over its useful life.

Discount

A reduction from the usual cost of something, often applied to encourage sales or offered to certain groups.