What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Quantitative Methods
Time Value of Money in Finance practice questions
Time Value of Money in Finance is part of CFA Level I Quantitative Methods. Quantitative Methods questions emphasize time value of money, probability, sampling, hypothesis testing, regression, and return statistics. Use this page to review the controlling ideas, then work through 9 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
Practice this topicHow to practice
Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Quantitative Methods
Time Value of Money in Finance
At an annual discount rate of 5%, the present value of 1,000 received in three years is closest to:
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Time Value of Money in Finance
A stated annual rate of 12% compounded monthly has an effective annual rate closest to:
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Time Value of Money in Finance
For the same payment amount, term, and discount rate, the present value of an annuity due is:
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Time Value of Money in Finance
A two-year bond has a 5% annual coupon, a par value of 1,000, and a required return of 6%. Its value is closest to:
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Time Value of Money in Finance
A preferred share pays a constant annual dividend of 4.00 and investors require an 8.00% return. Its value is closest to:
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Time Value of Money in Finance
A stock is valued at 60 using next year dividend of 3 and a required return of 9%. The implied constant growth rate is closest to:
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Time Value of Money in Finance
A project has cash flows of -1,000 today, 300 in year 1, 400 in year 2, and 500 in year 3. At an 8% discount rate, the NPV is closest to:
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Time Value of Money in Finance
The one-year spot rate is 3.00% and the two-year spot rate is 4.00%, both annual effective rates. The one-year forward rate one year from today is closest to:
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Time Value of Money in Finance
An analyst values three cash flows separately and then adds their present values to value a package of the three claims. This process is best described as applying:
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