Assume you invest 3500 today compounded semiannually with

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Reference no: EM13477535

1) Suppose you invest $3,500 today, compounded semiannually, with an annual interest rate of 8.50%. What amount of interest will you earn in one year?

A) $303.82

B) $307.12

C) $309.13

D) $313.82

2) What is the EAR if the APR is 5% and compounding is quarterly?

A) Slightly above 5.09%

B) Slightly below 5.09%

C) Under 5.00%

D) Over 5.25%

3) You put down 20% on a home with a purchase price of $300,000. The down payment is thus $60,000, leaving a balance owed of $240,000. The bank will loan you the remaining balance at 4.28% APR. You will make annual payments with a 20-year payment schedule. What is the annual annuity payment under this schedule?

A) $18,100.23

B) $22,625.29

C) $12,000.00

D) $33,785.23

4) Nominal interest rates are the sum of two major components. These components are ________.

A) the real interest rate and expected inflation

B) the risk-free rate and expected inflation

C) the real interest rate and default premium

D) the real interest rate and the T-bill rate

5) The ________ compensates the investor for the additional risk that the loan will not be repaid in full.

A) default premium

B) inflation premium

C) real rate

D) interest rate

Reference no: EM13477535

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