What Is the Future Value in Year Four of an Ordinary

question 109

Multiple Choice

What is the future value in year four of an ordinary annuity cash flow of $6,000 per year at an interest rate of 12.00% per year?

• A)$90,154.83
• B)$93,761.02
• C)$28,675.97
• D)$32,117.08

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Definitions:

Underlying Stock

Refers to the specific security or asset on which a derivative instrument, such as an option or future, is based.

March 30 Call Option

A financial derivative that gives the holder the right, but not the obligation, to buy an asset at a specified price on or before March 30.

Intrinsic Value

The actual, fundamental value of an asset, investment, or company, based on underlying perception of its true value including all aspects of the business.

Call Option

A financial contract giving the holder the right, but not the obligation, to buy an asset at a specified price within a specific time period.