Which of the Following Statements Is Correct

question 91

Multiple Choice

Which of the following statements is correct?

• A) Other things held constant,an increase in the number of discounting periods per year increases the present value of a given annual annuity.
• B) Other things held constant,an increase in the number of discounting periods per year increases the present value of a lump sum to be received in the future.
• C) The payment made each period under an amortized loan is constant,and it consists of some interest and some principal.The later we are is the loan's life,the smaller the interest portion of the payment.
• D) There is an inverse relationship between the present value interest factor of an annuity and the future value interest factor of an annuity, (i.e. ,one is the reciprocal of the other).
• E) Each of the above statements is true.

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Definitions:

Form 1040EZ

A simplified version of the IRS income tax return form for individuals with uncomplicated financial situations, no longer in use as of the 2019 tax year.

Interest Income

Earnings from interest-bearing accounts or investments, including savings accounts, certificates of deposit, bonds, and loans.

Tax Rate Structure

The framework defining how different levels of income are taxed at various rates, often progressive, where higher income incurs higher tax rates.

Progressive

A tax system in which the tax rate increases as the taxable amount increases, placing a larger burden on those who have higher incomes.