JustAnswer
| |
| |
| |
| |
|Question 1 of 40 |
|2.5/ 2.5 Points |
| |
|Your firm intends to finance the purchase of a new construction crane. The cost is $1,500,000. What is the size of the first payment if the |
|crane is financed with an interest-only loan at an annual rate of 8.50%? |
| |
| |
| |
|[pic] |
|A. $228,611.56 |
| |
| |
|[pic] |
|B. $127,500 |
| |
| |
|[pic] |
|C. $3,391,475.16 |
| |
| |
|[pic] |
|D. There is not enough information to answer this question. |
| |
| |
| |
| |
|Question 2 of 40 |
|2.5/ 2.5 Points |
| |
|You just won the Publisher's Clearing House Sweepstakes and the right to 20 after-tax ordinary annuity cash flows of $163,291.18. Assuming a|
|discount rate of 7.50%, what is the present value of your lottery winnings? Use a calculator to determine your answer. |
| |
| |
| |
|[pic] |
|A. $3,265,823.60 |
| |
| |
|[pic] |
|B. $1,789,520.81 |
| |
| |
|[pic] |
|C. $1,664,670.52 |
| |
| |
|[pic] |
|D. There is not enough information to answer this question. |
| |
| |
| |
| |
|Question 3 of 40 |
|2.5/ 2.5 Points |
| |
|Your employer has agreed to place year-end deposits of $1,000, $2,000, and $3,000 into your retirement account. The $1,000 deposit will be |
|one year from today, the $2,000 deposit two years from today, and the $3,000 deposit three years from today. If your account earns 5% per |
|year, how much money will you have in the account at the end of Year 3 when the last deposit is made? |
| |
| |
| |
|[pic] |
|A. $5,357.95 |
| |
| |
|[pic] |
|B. $6,000 |
| |
| |
|[pic] |
|C. $6,202.50 |
| |
| |
|[pic] |
|D. $6,727.88 |
| |
| |
| |
| |
|Question 4 of 40 |
|0.0/ 2.5 Points |
| |
|An annuity is a series of: |
| |
| |
| |
|[pic] |
|A. variable cash payments at regular intervals across time. |
| |
| |
|[pic] |
|B. equal cash payments at regular intervals across time. |
| |
| |
|[pic] |
|C. variable cash payments at different intervals across time. |
| |
| |
|[pic] |
|D. equal cash payments at different intervals across time. |
| |
| |
| |
| |
|Question 5 of 40 |
|0.0/ 2.5 Points |
| |
|What is the present value of a lottery paid as an annuity due for 20 years if the cash flows are $250,000 per year and the appropriate |
|discount rate is 7.50%? |
| |
| |
| |
|[pic] |
|A. $5,000,000.00 |
| |
| |
|[pic] |
|B. $3,186,045.39 |
| |
| |
|[pic] |
|C. $2,739,769.55 |
| |
| |
|[pic] |
|D. $2,548,622.84 |
| |
| |
| |
| |
|Question 6 of 40 |
|2.5/ 2.5 Points |
| |
|You have just won the Reader's Digest lottery of $5,000 per year for 20 years, with the first payment today followed by 19 more |
|start-of-the-year cash flows. At an interest rate of 5%, what is the present value of your winnings? |
| |
| |
| |
|[pic] |
|A. $100,000 |
| |
| |
|[pic] |
|B. $65,426.60 |
| |
| |
|[pic] |
|C. $62,311.05 |
| |
| |
|[pic] |
|D. $47,641.18 |
| |
| |
| |
| |
|Question 7 of 40 |
|0.0/ 2.5 Points |
| |
|What is the future value in Year 25 of an ordinary annuity cash flow of $2,000 per year at an interest rate of 10% per year? |
| |
| |
| |
|[pic] |
|A. $66,505.81 |
| |
| |
|[pic] |
|B. $55,000.00 |
| |
| |
|[pic] |
|C. $196,694.12 |
| |
| |
|[pic] |
|D. $216,363.53 |
| |
| |
| |
| |
|Question 8 of 40 |
|0.0/ 2.5 Points |
| |
|Your department at work places $10,000 every year-end into an account earning 5%. The money is used when the corporate office fails to fully|
|finance your profitable projects. The money has not been touched since a deposit was made exactly five years ago. If the most recent deposit|
|was made today, how much money is currently in the account? |
| |
| |
| |
|[pic] |
|A. $55,256.31 |
| |
| |
|[pic] |
|B. $60,000 |
| |
| |
|[pic] |
|C. $65,256.31 |
| |
| |
|[pic] |
|D. $68,019.13 |
| |
| |
| |
| |
|Question 9 of 40 |
|2.5/ 2.5 Points |
| |
|A/An __________ is a series of equal end-of-the-period cash flows. |
| |
| |
| |
|[pic] |
|A. annuity |
| |
| |
|[pic] |
|B. annuity due |
| |
| |
|[pic] |
|C. perpetuity due |
| |
| |
|[pic] |
|D. None of the above |
| |
| |
| |
| |
|Question 10 of 40 |
|2.5/ 2.5 Points |
| |
|If for the next 40 years you place $3,000 in equal year-end deposits into an account earning 8% per year, how much money will be in the |
|account at the end of that time period? |
| |
| |
| |
|[pic] |
|A. $120,000.00 |
| |
| |
|[pic] |
|B. $777,169.56 |
| |
| |
|[pic] |
|C. $839,343.12 |
| |
| |
|[pic] |
|D. $2,606,942.58 |
| |
| |
| |
| |
|Question 11 of 40 |
|0.0/ 2.5 Points |
| |
|You currently have $67,000 in an interest-earning account. From this account, you wish to make 20 year-end payments of $5,000 each. What |
|annual rate of return must you make on this account to meet your objective? |
| |
| |
| |
|[pic] |
|A. 4.16% |
| |
| |
|[pic] |
|B. 5.03% |
| |
| |
|[pic] |
|C. 6.42% |
| |
| |
|[pic] |
|D. 7.32% |
| |
| |
| |
| |
|Question 12 of 40 |
|0.0/ 2.5 Points |
| |
|Your company just sold a product with the following payment plan: $50,000 today, $25,000 next year, and $10,000 the following year. If your |
|firm places the payments into an account earning 10% per year, how much money will be in the account after collecting the last payment? |
| |
| |
| |
|[pic] |
|A. $99,000 |
| |
| |
|[pic] |
|B. $98,000 |
| |
| |
|[pic] |
|C. $88,500 |
| |
| |
|[pic] |
|D. $85,000 |
| |
| |
| |
| |
|Question 13 of 40 |
|0.0/ 2.5 Points |
| |
|Your parents have an investment portfolio of $400,000, and they wish to take out cash flows of $50,000 per year as an ordinary annuity. How |
|long will their portfolio last if the portfolio is invested at an annual rate of 4.50%? Use a calculator to determine your answer. |
| |
| |
| |
|[pic] |
|A. 8 years |
| |
| |
|[pic] |
|B. 9.10 years |
| |
| |
|[pic] |
|C. 9.60 years |
| |
| |
|[pic] |
|D. 10.14 years |
| |
| |
| |
| |
|Question 14 of 40 |
|0.0/ 2.5 Points |
| |
|When you pay off the principal and all of the interest at one time at the maturity date of the loan, we call this type of loan a(n): |
| |
| |
| |
|[pic] |
|A. amortized loan. |
| |
| |
|[pic] |
|B. interest-only loan. |
| |
| |
|[pic] |
|C. discount loan. |
| |
| |
|[pic] |
|D. compound loan. |
| |
| |
| |
| |
|Question 15 of 40 |
|0.0/ 2.5 Points |
| |
|Given the following cash flows, what is the future value at Year 6 when compounded at an interest rate of 8%? |
|Year |
|0 |
|2 |
|4 |
|6 |
| |
|Cash Flow |
|$5,000 |
|$7,000 |
|$9,000 |
|$11,000 |
| |
| |
| |
| |
| |
|[pic] |
|A. $38,955.39 |
| |
| |
|[pic] |
|B. $56,687.43 |
| |
| |
|[pic] |
|C. $42,074.42 |
| |
| |
|[pic] |
|D. $32,000 |
| |
| |
| |
| |
|Question 16 of 40 |
|0.0/ 2.5 Points |
| |
|If you borrow $100,000 at an annual rate of 8% for a 10-year period and repay the total amount of principal and interest due of $215,892.50 |
|at the end of 10 years, what type of loan did you have? |
| |
| |
| |
|[pic] |
|A. Amortized loan |
| |
| |
|[pic] |
|B. Interest-only loan |
| |
| |
|[pic] |
|C. Discount loan |
| |
| |
|[pic] |
|D. Compound loan |
| |
| |
| |
| |
|Question 17 of 40 |
|0.0/ 2.5 Points |
| |
|The main variables of the TVM equation are: |
| |
| |
| |
|[pic] |
|A. present value, future value, time, interest rate, and payment. |
| |
| |
|[pic] |
|B. present value, future value, perpetuity, interest rate, and payment. |
| |
| |
|[pic] |
|C. present value, future value, time, annuity, and interest rate. |
| |
| |
|[pic] |
|D. present value, future value, perpetuity, interest rate, and principal. |
| |
| |
| |
| |
|Question 18 of 40 |
|0.0/ 2.5 Points |
| |
|What is the future value in Year 12 of an ordinary annuity cash flow of $6,000 per year at an interest rate of 4% per year? |
| |
| |
| |
|[pic] |
|A. $90,154.83 |
| |
| |
|[pic] |
|B. $93,761.02 |
| |
| |
|[pic] |
|C. $28,675.97 |
| |
| |
|[pic] |
|D. $32,117.08 |
| |
| |
| |
| |
|Question 19 of 40 |
|0.0/ 2.5 Points |
| |
|The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal |
|annual end-of-the-year payments of $1,000 each with the first payment to be made one year from today. If the discount rate is 6%, what is |
|the present value of the furniture payments? |
| |
| |
| |
|[pic] |
|A. $3,183.60 |
| |
| |
|[pic] |
|B. $3,000 |
| |
| |
|[pic] |
|C. $2,833.39 |
| |
| |
|[pic] |
|D. $2,673.01 |
| |
| |
| |
| |
|Question 20 of 40 |
|0.0/ 2.5 Points |
| |
|If you borrow $50,000 at an annual interest rate of 12% for six years, what is the annual payment (prior to maturity) on a discount loan? |
| |
| |
| |
|[pic] |
|A. $0 |
| |
| |
|[pic] |
|B. $6,000 |
| |
| |
|[pic] |
|C. $8,333.33 |
| |
| |
|[pic] |
|D. $12,161.29 |
| |
| |
| |
| |
|Part 2 of 2 - Lesson 5 Questions |
|17.5/ 50.0 Points |
| |
| |
|Question 21 of 40 |
|0.0/ 2.5 Points |
| |
|Suppose you deposit money in a certificate of deposit (CD) at a bank. Which of the following statements is true? |
| |
| |
| |
|[pic] |
|A. The bank is borrowing money from you without a promise to repay that money with interest. |
| |
| |
|[pic] |
|B. The bank is lending money to you with a promise to repay that money with interest. |
| |
| |
|[pic] |
|C. The bank is technically renting money from you with a promise to repay that money with interest. |
| |
| |
|[pic] |
|D. The bank is lending money to you, but not borrowing money from you. |
| |
| |
| |
| |
|Question 22 of 40 |
|0.0/ 2.5 Points |
| |
|The phrase "price to rent money" is sometimes used to refer to: |
| |
| |
| |
|[pic] |
|A. historical prices. |
| |
| |
|[pic] |
|B. compound rates. |
| |
| |
|[pic] |
|C. discount rates. |
| |
| |
|[pic] |
|D. interest rates. |
| |
| |
| |
| |
|Question 23 of 40 |
|0.0/ 2.5 Points |
| |
|Suppose you postpone consumption so that by investing at 8% you will have an extra $800 to spend in one year. Suppose that inflation is 4% |
|during this time. What is the approximate real increase in your purchasing power? |
| |
| |
| |
|[pic] |
|A. $800 |
| |
| |
|[pic] |
|B. $600 |
| |
| |
|[pic] |
|C. $400 |
| |
| |
|[pic] |
|D. $200 |
| |
| |
| |
| |
|Question 24 of 40 |
|2.5/ 2.5 Points |
| |
|The number of periods for a consumer loan (n) is equal to the: |
| |
| |
| |
|[pic] |
|A. number of years times compounding periods per year. |
| |
| |
|[pic] |
|B. number of years. |
| |
| |
|[pic] |
|C. number of years in a period. |
| |
| |
|[pic] |
|D. number of compounding periods. |
| |
| |
| |
| |
|Question 25 of 40 |
|0.0/ 2.5 Points |
| |
|When interest rates are stated or given for loan repayments, it is assumed that they are __________ unless specifically stated otherwise. |
| |
| |
| |
|[pic] |
|A. daily rates |
| |
| |
|[pic] |
|B. annual percentage rates |
| |
| |
|[pic] |
|C. effective annual rates |
| |
| |
|[pic] |
|D. APYs |
| |
| |
| |
| |
|Question 26 of 40 |
|0.0/ 2.5 Points |
| |
|As applied to mortgage loans, which of the following statements is FALSE? |
| |
| |
| |
|[pic] |
|A. Advertised rates are annual percentage rates. |
| |
| |
|[pic] |
|B. A spreadsheet uses the periodic interest rate, not the annual percentage rate. |
| |
| |
|[pic] |
|C. By increasing the number of payments per year you increase your effective borrowing rate. |
| |
| |
|[pic] |
|D. A mortgage problem is unlike a future value problem with an annuity. |
| |
| |
| |
| |
|Question 27 of 40 |
|0.0/ 2.5 Points |
| |
|The Fisher Effect involves which of the items below? |
| |
| |
| |
|[pic] |
|A. Nominal rate, the real rate, and inflation |
| |
| |
|[pic] |
|B. Nominal rate and the real rate only |
| |
| |
|[pic] |
|C. Nominal rate and inflation only |
| |
| |
|[pic] |
|D. Nominal rate, the bond rate, and inflation |
| |
| |
| |
| |
|Question 28 of 40 |
|2.5/ 2.5 Points |
| |
|Assume that you are willing to postpone consumption today and buy a certificate of deposit (CD) at your local bank. Your reward for |
|postponing consumption implies that at the end of the year: |
| |
| |
| |
|[pic] |
|A. you will be able to consume fewer goods. |
| |
| |
|[pic] |
|B. you will be able to buy the same amount of goods or services. |
| |
| |
|[pic] |
|C. you will be able to buy fewer goods or services. |
| |
| |
|[pic] |
|D. you will be able to buy more goods or services. |
| |
| |
| |
| |
|Question 29 of 40 |
|2.5/ 2.5 Points |
| |
|Which of the following statements is true if you increase your monthly payment above the required loan payment? |
| |
| |
| |
|[pic] |
|A. The extra portion of the payment does not go to the principal. |
| |
| |
|[pic] |
|B. You can significantly increase the number of payments needed to pay off the loan. |
| |
| |
|[pic] |
|C. The extra portion of the payment increases the principal. |
| |
| |
|[pic] |
|D. You can significantly reduce the number of payments needed to pay off the loan. |
| |
| |
| |
| |
|Question 30 of 40 |
|0.0/ 2.5 Points |
| |
|The two major components of the interest rate that cause rates to vary across different investment opportunities or loans are: |
| |
| |
| |
|[pic] |
|A. the default premium and the bankruptcy premium. |
| |
| |
|[pic] |
|B. the liquidity premium and the maturity premium. |
| |
| |
|[pic] |
|C. the default premium and the maturity premium. |
| |
| |
|[pic] |
|D. the inflation premium and the maturity premium. |
| |
| |
| |
| |
|Question 31 of 40 |
|0.0/ 2.5 Points |
| |
|If you take out a loan from a bank, you will be charged: |
| |
| |
| |
|[pic] |
|A. for principal but not interest. |
| |
| |
|[pic] |
|B. for interest but not principal. |
| |
| |
|[pic] |
|C. for both principal and interest. |
| |
| |
|[pic] |
|D. for interest only. |
| |
| |
| |
| |
|Question 32 of 40 |
|0.0/ 2.5 Points |
| |
|A company selling a bond is __________ money. |
| |
| |
| |
|[pic] |
|A. borrowing |
| |
| |
|[pic] |
|B. lending |
| |
| |
|[pic] |
|C. taking |
| |
| |
|[pic] |
|D. reinvesting |
| |
| |
| |
| |
|Question 33 of 40 |
|0.0/ 2.5 Points |
| |
|The __________ compensates the investor for the additional risk that the loan will not be repaid in full. |
| |
| |
| |
|[pic] |
|A. default premium |
| |
| |
|[pic] |
|B. inflation premium |
| |
| |
|[pic] |
|C. real rate |
| |
| |
|[pic] |
|D. interest rate |
| |
| |
| |
| |
|Question 34 of 40 |
|0.0/ 2.5 Points |
| |
|James is a rational investor wishing to maximize his return over a 20-year period. The current yield curve is inverted with one-year rates |
|at 5% and 20-year rates at 3.5%. James will invest in the lower-rate 20-year bonds if: |
| |
| |
| |
|[pic] |
|A. he thinks rates will fall in the future and locking in long-term rates today may provide the highest long-run average return. |
| |
| |
|[pic] |
|B. he thinks rates will rise in the future and locking in long-term rates today may provide the lowest long-run average return. |
| |
| |
|[pic] |
|C. he thinks rates will remain flat at 5% in the future and locking in long-term rates today will prevent him from appearing greedy to those|
|without this investment opportunity. |
| |
| |
|[pic] |
|D. James has no idea what to do and should just skip this question. |
| |
| |
| |
| |
|Question 35 of 40 |
|2.5/ 2.5 Points |
| |
|Nominal interest rates are the sum of two major components. These components are: |
| |
| |
| |
|[pic] |
|A. the real interest rate and expected inflation. |
| |
| |
|[pic] |
|B. the risk-free rate and expected inflation. |
| |
| |
|[pic] |
|C. the real interest rate and default premium. |
| |
| |
|[pic] |
|D. the real interest rate and the T-bill rate. |
| |
| |
| |
| |
|Question 36 of 40 |
|2.5/ 2.5 Points |
| |
|The frequency of default on a home loan is __________ the frequency of default on a credit card. |
| |
| |
| |
|[pic] |
|A. much lower than |
| |
| |
|[pic] |
|B. much higher than |
| |
| |
|[pic] |
|C. a bit lower than |
| |
| |
|[pic] |
|D. a bit higher than |
| |
| |
| |
| |
|Question 37 of 40 |
|0.0/ 2.5 Points |
| |
|What is the EAR if the APR is 10.52% and compounding is daily? |
| |
| |
| |
|[pic] |
|A. Slightly above 10.09% |
| |
| |
|[pic] |
|B. Slightly below 11.09% |
| |
| |
|[pic] |
|C. Slightly above 11.09% |
| |
| |
|[pic] |
|D. Over 11.25% |
| |
| |
| |
| |
|Question 38 of 40 |
|2.5/ 2.5 Points |
| |
|We can write the true relationship between the nominal interest rate and the real rate and expected inflation as which of the following? |
| |
| |
| |
|[pic] |
|A. (1 + r) = (1 + r) × (1 + h*) |
| |
| |
|[pic] |
|B. r = (1 + r*) × (1 + h) - 1 |
| |
| |
|[pic] |
|C. r* = (1 + r) × (1 + h) -1 |
| |
| |
|[pic] |
|D. r = (1 + r*) × (1 + h) + 1 |
| |
| |
| |
| |
|Question 39 of 40 |
|0.0/ 2.5 Points |
| |
|Assume you just bought a new home and now have a mortgage on the home. The amount of the principal is $150,000, the loan is at 5% APR, and |
|the monthly payments are spread out over 30 years. What is the loan payment? Use a calculator to determine your answer. |
| |
| |
| |
|[pic] |
|A. $798.95 |
| |
| |
|[pic] |
|B. $805.23 |
| |
| |
|[pic] |
|C. $850.32 |
| |
| |
|[pic] |
|D. $903.47 |
| |
| |
| |
| |
|Question 40 of 40 |
|2.5/ 2.5 Points |
| |
|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? |
| |
| |
| |
|[pic] |
|A. $18,100.23 |
| |
| |
|[pic] |
|B. $22,625.29 |
| |
| |
|[pic] |
|C. $12,000.00 |
| |
| |
|[pic] |
|D. $33,785.23 |
| |
| |
| |
| |
| | | | | | |
| | | | | | |
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.