1. Cash flows of two years in absolute terms are uncomparable.’ Give reasons in support of your…

1.       Cash flows of two years in absolute terms are uncomparable.’ Give reasons in support of your answer.

Don't use plagiarized sources. Get Your Custom Essay on
1. Cash flows of two years in absolute terms are uncomparable.’ Give reasons in support of your…
Just from $13/Page
Order Essay

2.       Define the following terms and phrases:   (a) Compound sum of an annuity   (b) Present value of a future sum  (c) Present value of an annuity   (d) Perpetuity   (e) Annuity   (f) Discount rate

3.       What happens to the effective rate of interest as the frequency of compounding is increased?

4.       As a financial consultant, will you advise your client to have term deposit in a commercial bank which pays 8 per cent interest compounded semi-annually or 8 per cent interest compounded annually? Why?

5.       What effect do   (a) increasing rate of interest and   (b) increasing time period have on   (i) the present value of a future sum and   (ii) the future value of the present sum? Why?