Q1. 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
Q2. 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
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
Q3. 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
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
Q4. In a loan of 8% compounded quarterly, what is the periodic interest rate? a. 4% b. 6% c. 2.5% d. 2%
Q5. 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
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. 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
Q8. $15,000.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
Q9. The effective rate is: a. the stated rate b. the true semiannual rate c. the annual percentage yield rate d. the nominal rate e. the beginning rate
Q10. The amount of an ordinary $7,500.00 annuity for 3 years at 12% compounded quarterly is: a. $106,440.00 b. $23,182.50 c. $180,997.50 d. $25,305.00
Q11. 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
d. $139,269.60
Q12. Which of the following is not an example of the use of a sinking fund? a. pay an installment loan b. pay for equipment replacement c. pay for a new factory d. retire bonds e. none of the above
Q13. 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
Q14. A __________ __________ is used to accumulate a required amount of money by the end of a certain period of time to pay off a financial obligation. a. sinking fund b. compound interest c. present value d. checking account e. none of the above
Q15. 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
fund d. at the beginning of each period e. none of the above
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.
An annuity with specific number of payment periods is referred to as a(n): a. contingent annuity b. annuity certain c. annual annuity d. guaranteed annuity
An annuity with specific number of payment periods is referred to as a(n): a. contingent annuity b. annuity certain c. annual annuity d. guaranteed annuity
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. 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 Note Exact answer is 434.65
Q 20. 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
Q21. 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
Q22. The primary mortgage on a home is called the: a. collateral b. real mortgage c. first mortgage d. FNMA
Q23. The difference between the monthly payments on a $95,000.00 mortgage at 5% versus 6% for 25 years is: a. $65.05 b. $56.05 c. $56.50 d. $56.60
56.73 is exact answer.
Q 24. 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
at the closing. The points amounted to: a. $750.00 b. $7,500.00 c. $2,500.00 d. $5,000.00
Q25. 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
first five years d. the interest rate can change
