Future Value of Annuity Quiz
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Questions and Answers

What does the future value of an annuity measure?

  • The future worth of a series of cash flows (correct)
  • The average worth of a series of cash flows
  • The present worth of a series of cash flows
  • The maximum worth of a series of cash flows
  • How are present value and future value related?

  • The present value is always higher than the future value
  • The future value is not related to the present value
  • The future value of a series of cash flows also has a present value (correct)
  • The present value cannot be calculated
  • In what scenario would an investor try to solve for the future value?

  • When solving for the present value of a future amount needed
  • When buying a stock today with a known dividend yield (correct)
  • When calculating the present value of an investment
  • When the future value is not relevant in investment decisions
  • What can be solved for if an individual wants to have a specific future value on hand for a down payment next year?

    <p>The present value</p> Signup and view all the answers

    What is the relationship between present value and future value in terms of cash flows?

    <p>The future value of a series of cash flows also has a present value</p> Signup and view all the answers

    What is the relationship between present value and future value in terms of cash flows?

    <p>Present value and future value indicate the value of an investment looking forward or looking back</p> Signup and view all the answers

    In what scenario would an investor try to solve for the future value?

    <p>Buying a stock today for a specific price with a known dividend yield</p> Signup and view all the answers

    What can be solved for if an individual wants to have a specific future value on hand for a down payment next year?

    <p>Present value</p> Signup and view all the answers

    What does the future value of an annuity measure?

    <p>The value of a series of cash flows at a future date</p> Signup and view all the answers

    How are present value and future value related?

    <p>Future value of a series of cash flows also has a present value</p> Signup and view all the answers

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