Chapter Three: Time Value of Money
Multiple Choice Questions(MCQ):
1. What is the main reason of measuring the
time value of money?
a. Interest rate
b. currency policy
c. liquidity
d. additional profit
2. Which of the following is given of
principal with interest?
a. Simple interest
b. Compound interest
c. Total interest
d. Net interest
3. Discounting process means
i) Process of measuring the amount of
discount
ii) Techniques to measure the present value
of money
iii) Process of dividing principal with
interest by the interest rate
Which one is correct?
a. i
& ii
b. i
& iii
c. ii & iii
d. i, ii & iii
4. Which factor of the following has vast
importance in Time Value of Money?
a. Identify the interest rate
b. Investment decision taken
c. Measure financial condition
d. Decrease installment of loan
5. Withdrawing from the provident fund Mr.
Harun wants to invest some money in Digital Bank at 12% interest rate for 5
years. Bank says, after 5 years bank will pay Tk. 5, 00,000.00. How much money
Mr. Harun wants to deposit in Digital Bank?
a. Tk. 2,00,730.00
b. Tk. 2,83,720.00
c. Tk. 3,13,520.00
d. Tk. 4,40,000.00
Read the passage below and answer the
question No.6, 7 and 8.
Due to the lack of personal fund Mr. Karim
wants to purchase a fridge by taking loan against Tk. 1000.00 monthly
installment for 10 years and for which he has to pay 12% interest rate.
6. Benefit given to Mr. Rezaul is under
which policy?
a. Customer service
b. Consumer credit
c. Home loan
d. Opportunity cost.
7. What is the present value of Mr.
Rezaul’s fridge?
a. Tk. 5,667.00
b. Tk. 56,667.00
c. Tk. 69,700.00
d. Tk. 1,20,000.00
8. Keeping other condition constant if
interest rate becomes double as 24% --
i) The fridge will be bought at purchase
price.
ii) Due loan will be double.
iii) Amount of loan will decrease.
Which one is correct?
a. i
& ii
b. i
& iii
c. ii & iii
d. i, ii & iii.
[ Answer Key : 1(a), 2(b), 3(c), 4(b), 5(b),
6(b), 7(c) & 8(b)]
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