Reference no: EM13969422
Q1. Your company needs to have $40,465.00 five years from now. If the interest rate at your bank is 6% compounded quarterly, how much will you need to deposit into your account today in order to have the desired amount in 5 years?
a. $29,999.26
b. $29,666.92
c. $30,044.05
d. $30,000.00
e. $20,044.05
Q2. Sunfresh Markets made a $13,000.00 investment in a compound interest account paying 8% compounded monthly. What was the value of its investment at the end of 8 months? (Choose the closest answer)
a. 12710.00
b. 13710.00
c. 13860.00
d. 14710.00
e. 24062.00
Q3. In a loan of 8% compounded quarterly, what is the periodic interest rate?
a. 4%
b. 6%
c. 2.5%
d. 2%
Q4. $15,000.00 for 10 years compounded at 10% quarterly results in how many periods?
a. 20
b. 10
c. 120
d. 40
e. none of the above
Q5. The compound interest on a $3,000.00 loan at 7% for 3 years compounded annually is:
a. $3,675.13
b. $630.00
c. $3,630.00
d. $675.13
e. none of the above
Q6. If interest is compounded, the total amount at the end of the loan or investment term is called the:
a. future value
b. compound amount
c. present value
d. both A and B
e. none of the above
Q7. Starting with $4,500.00, what will it grow to in 5 years at 7.25% compounded daily.
a. $6,385.95
b. $6,465.89
c. $6,358.59
d. $6,835.59
e. $9,444.50
Q8. If you borrow $1000 at an APR of 12% and pay it back in one year making the same payment amount each month, what principal (P) and interest (I) have you paid when the load is paid off?
a. P=$1200, I=$120
b. P=$1000, I=$120
c. P=$1000, I=$66.19
d. P=$1200, I=$65.50
e. P=$1000, I=$60.00
Q9. How much should be invested today to provide $1,800.00 in one year? Assume 10% interest compounded annually.
a. $1,636.36
b. $1,782.00
c. $1,620.00
d. $493.15
e. $1,647.42
Q10. When a series of equal periodic payments is put into an interest bearing account for a specific number of periods, this is known as a(n):
a. annuity
b. discounting procedure
c. compound interest plan
d. high risk investment
Q11. __________ is the present value of an annuity of $1,500.00 for 6 years at 6% compounded semiannually.
a. $12,576.00
b. $7,375.50
c. $8,125.50
d. $14,931.00
e. none of the above
Q12. A(n) __________ __________ is an annuity with payments made at the end of each period.
a. annuity certain
b. term annuity
c. annuity due
d. annual annuity
e. none of the above
Q13. Payments into a sinking fund are always made when?
a. when the funds are available
b. at the end of each period
c. lump sum at the beginning of the sinking fund
d. at the beginning of each period
e. none of the above
Q14. What is the value of an annuity due at the end of 15 years of quarterly deposits of $2,000.00 with terms of 8% compounded quarterly?
a. $228,102.00
b. $232,665.14
c. $232,666.08
d. $228,120.00
e. none of the above
Q15. An annuity without a specific number of payment periods is termed a(n):
a. non-standard annuity
b. annual annuity
c. contingent annuity
d. annuity certain
Q16. __________ __________ is an annuity with payments made at the beginning of each period.
a. Annuity certain
b. Ordinary annuity
c. Contingent annuity
d. Annuity due
e. None of the above
Q17. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is:
a. $23,269.60
b. $116,000.00
c. $23,296.60
d. $139,269.60
Q18. All payments on a mortgage are required to be paid on a __________ basis.
a. semiannually
b. biweekly
c. monthly
d. weekly
e. agreed
Q19. Jayne purchased a home for $240,000.00 with a down payment of $48,000.00. The rate of interest was 5-3/4 for 30 years. What was her monthly mortgage payment?
a. $962.70
b. $2,146.85
c. $1,121.28
d. $1,850.46
e. $1000.00
Q20. Derek purchased a home for $225,000.00 with a down payment of $30,000.00 at 8.75% for 25 years. Since then the rate has fallen to 5.25%. How much less would his monthly payment be if he purchased the house with the mortgage at 5.25%?
a. $443.85
b. $434.58
c. $423.58
d. $434.85
e. $419.85
Q21. Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at the closing. The points amounted to:
a. $750.00
b. $7,500.00
c. $2,500.00
d. $5,000.00
Q22. A variable rate mortgage means:
a. payments will be larger than on a fixed rate mortgage
b. the interest rate cannot change
c. the interest rate is fixed for the first five years
d. the interest rate can change
23. Points represent:
a. monthly payments
b. a 3 percent up front payment
c. an additional cost of financing
d. 2 percent of the amount borrowed
Q24. Land or anything permanently attached to the land is termed:
a. real property
b. FNMA
c. collateral
d. personal property.