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Multiple Choice Quiz 2
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1
Compound tables are all based on less than one dollar
A)True
B)False
2
Future value, or compound amount is the final amount of the loan at the end of the last period.
A)True
B)False
3
All present value tables are based on more than one dollar.
A)True
B)False
4
The rate for table look-up on a $6,000, 8% investment compounded semiannually for 4 years is 2
A)True
B)False
5
A table factor of .9259, from a present value table means that if almost $.93 is invested at a certain rate of interest for a certain number of periods it is only worth $1 in the past.
A)True
B)False
6
APY stands for:
A)All principal
B)Interest rate before compounding
C)Effective rate after compounding
D)Annual payment
E)None of the above
7
By using the table in the handbook, the value of $90 deposited in a bank for 7 years at a rate of 8% compounded annually is:
A)$15.42
B)$91.73
C)$154.24
D)$145.42
E)None of the above
8
The effective rate (APY) is:
A)The nominal rate
B)The stated rate
C)True semiannual rate
D)Based on one year
E)None of the above
9
Present value:
A)Is the same as compounding
B)Starts with the future and goes to the present
C)Cannot use tables
D)Cannot be done by formula
E)None of the above
10
Using the table in the handbook, the present value of $8,000 at 8% compounded quarterly for 4 years is:
A)$4,442.80
B)$15,076.00
C)$5,827.20
D)$4,244.90
E)None of the above
11
$20,000 for 14 years compounded at 10% semiannually results in how many periods?
A)20
B)40
C)14
D)28
E)None of the above
12
Lorne Ming deposits $17,500 into National Bank which pays 6% interest that is compounded quarterly. By using the table in the handbook, what will Lorne have in this account at the end of 5 years?
A)$23,570.75
B)$23,750.75
C)$23,057.30
D)$23,422.90
E)None of the above
13
Jamie King wants to buy a new car in 5 years. Jamie estimates the cost of the car will be $11,000. If she invests $9,000 now at a rate of 6 % compounded semiannually, she:
A)Will not have enough money
B)Will have exactly $11,000.00
C)Will have $12,100.00
D)Will have $12,095.10
E)None of the above
14
Gail Creene deposited $30,000 at Y Bank at an interest rate of 6% compounded quarterly. (Use the tables in the handbook). The effective rate (APY) is:
A)6 percent
B)6.14 percent
C)6.24 percent
D)16.14 percent
E)None of the above
15
Lois Chin wants to retire in California when she is 70 years of age. Lois, who is now 50, believes she will need $400,000 to retire comfortably. To date, she has set aside no retirement money. If she gets an interest rate of 8% compounded semiannually, she will have to invest today: (Use the tables in the handbook)
A)$38,000
B)$83,320
C)$38,320
D)$316,680
E)None of the above





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