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Author Question: Rob's income was 20,000 in 2005 and 22,000 in 2006. If inflation was 6 in 2006, then we can say that ... (Read 103 times)

sjones

  • Hero Member
  • *****
  • Posts: 520
on: Jul 11, 2018
Rob's income was 20,000 in 2005 and 22,000 in 2006. If inflation was 6 in 2006, then we can say that Rob's 2006 income
 
  A)
 
  simply matched the inflation rate.
  B)
 
  fell behind the inflation rate.
  C)
 
  exceeded the inflation rate by 4.
  D)
 
  lagged the inflation rate by 2.

Question 2

You have the choice of two equally risk annuities, each paying 5,000 per year for 8 years. One is an
  annuity due and the other is an ordinary annuity.
 
  If you are going to be receiving the annuity
  payments, which annuity would you choose to maximize your wealth?
  A) the annuity due
  B) the ordinary annuity
  C) Since we don't know the interest rate, we can't find the value of the annuities and hence we
  cannot tell which one is better.
  D) either one because they have the same present value


fdliggud

  • Sr. Member
  • ****
  • Posts: 366
Reply #1 on: Jul 11, 2018
Answer to Question 1

C

Answer to Question 2

A


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