Question 1

Provide an appropriate response.
-________ is interest paid only on the original principal, and not on any interest added at later dates.

Accepted Answer

A) Simple interest 
B) Basic interest 
C) Compound Interest 
D) None of the above 
A) Simple interest 
B) Basic interest 
C) Compound Interest 
D) None of the above

Question 2

Solve the problem. Refer to the table if necessary.  
-Andy earned $74,358 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard
Deduction.

Accepted Answer

A) 29.3% 
B) 24.1% 
C) 23.8% 
D) 23.2% 
A) 29.3% 
B) 24.1% 
C) 23.8% 
D) 23.2%

Question 3

Solve the problem.
-In a recent year, the total receipts for the US federal government were estimated to be $2288 billion. The total outlays were estimated to be $2613 billion. The table below shows the makeup of federal
Government receipts that year - the percentage of total receipts coming from each category.   How much income came from individual income taxes that year?

Accepted Answer

A) $1 trillion 
B) $1.1 trillion 
C) $965 billion 
D) $847 billion 
A) $1 trillion 
B) $1.1 trillion 
C) $965 billion 
D) $847 billion

Question 4

Compute the total and annual returns on the described investment.
-Five years after buying 200 shares of $X Y Z$ stock for $\$ 30$ per share, you sell the stock for $\$ 10,000$.

Accepted Answer

A)  Total Return: $60.00 \%$
Annual Return: $9.68 \%$ 
B)  Total Return: 70.00\%
Annual Return: 11.29\% 
C)  Total Return: 56.67\%
Annual Return: 9.14\% 
D)  Total Return: $66.67 \%$

Annual Return: 10.76\% 
A)  Total Return: $60.00 \%$
Annual Return: $9.68 \%$ 
B)  Total Return: 70.00\%
Annual Return: 11.29\% 
C)  Total Return: 56.67\%
Annual Return: 9.14\% 
D)  Total Return: $66.67 \%$

Annual Return: 10.76\%

Question 5

Provide an appropriate response.
-What type of spending is easiest for the government to control?

Accepted Answer

A) Discretionary spending 
B) Entitlement spending 
C) Interest payments on the debt 
D) Medicare 
A) Discretionary spending 
B) Entitlement spending 
C) Interest payments on the debt 
D) Medicare

Question 6

Decide whether the statement makes sense. Explain your reasoning.
-I have a 30-year mortgage and have been paying it off for 6 years now so I should have
paid off about one fifth of the principal by now.

Accepted Answer

No, the statement does not make sense. A

Question 7

Solve the equation for the unknown quantity.
-$8 x = 56$

Accepted Answer

A)  $\frac { 1 } { 7 }$ 
B)  7 
C)  48 
D)  448 
A)  $\frac { 1 } { 7 }$ 
B)  7 
C)  48 
D)  448

Question 8

Find the annual percentage yield (APY).
-A bank offers an APR of 2.2% compounded daily.

Accepted Answer

A) 4.40% 
B) 2.22% 
C) 102.22% 
D) 2.29% 
A) 4.40% 
B) 2.22% 
C) 102.22% 
D) 2.29%

Question 9

Solve the problem.
-Suppose your after-tax income is $40,040. Your annual expenses are $25,017 for rent, $6199 for food and household expenses, $1253 for interest on credit cards, and $7374 for entertainment, travel, and
Other. You expect to get a 25% raise next year. Could you afford $4782 in tuition and fees without
Going into debt?

Accepted Answer

A) True 
 B)False

Question 10

Provide an appropriate response.
-A mortgage lender will typically require a down payment of 40% to 50% of the
purchase price.

Accepted Answer

A) True 
 B)False

Question 11

Calculate the balance under the given assumptions.
-Find the savings plan balance after 25 months with an APR of 3% and monthly payments of $476.

Accepted Answer

A) $4887.37 
B) $12,263.94 
C) $10,424.35 
D) $5749.85 
A) $4887.37 
B) $12,263.94 
C) $10,424.35 
D) $5749.85

Question 12

Solve the problem. Refer to the table if necessary.  
-Jenny earned wages of $99,016, received $5325 in interest from a savings account, and contributed $ 5935 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had
Deductions totaling $8971. Find her taxable income.

Accepted Answer

A) $85,535 
B) $93,335 
C) $98,406 
D) $110,276 
A) $85,535 
B) $93,335 
C) $98,406 
D) $110,276

Question 13

Solve the problem.
-Calculate the current yield for a $1000 Treasury bond with a coupon rate of 2.5% that has a market value of $750.

Accepted Answer

A) 3.67% 
B) 2.50% 
C) 3.00% 
D) 3.33% 
A) 3.67% 
B) 2.50% 
C) 3.00% 
D) 3.33%

Question 14

Solve the problem.
-$5832 is deposited into a savings account at 9% interest, compounded monthly. To the nearest year, how long will it take for the account balance to reach $1,000,000?

Accepted Answer

A) 57 years 
B) 40 years 
C) 80 years 
D) 52 years 
A) 57 years 
B) 40 years 
C) 80 years 
D) 52 years

Question 15

Solve.
-Determine the total payment over the term of a student loan of $60,097 at a fixed APR of 7% for 20 years.

Accepted Answer

A) $111,823.54 
B) $111,802.23 
C) $111,853.35 
D) $111,898.07 
A) $111,823.54 
B) $111,802.23 
C) $111,853.35 
D) $111,898.07

Question 16

Solve the equation for the unknown quantity.
-$\mathrm { t } - 7 = 11$

Accepted Answer

A)  $- 18$ 
B)  4 
C)  $- 4$ 
D)  18 
A)  $- 18$ 
B)  4 
C)  $- 4$ 
D)  18

Question 17

Provide an appropriate response.
-What is the compound interest formula for interest paid more than once a year?

Accepted Answer

A)  $A = P \left( 1 + \frac { A P R } { n } \right) ^ { n Y }$ 
B)  $\mathrm { A } = \mathrm { P } \times ( 1 + \mathrm { APR } ) ^ { \mathrm { n } Y }$ 
C)  $A = P \left( 1 + \frac { A P R } { Y } \right) ^ { Y }$ 
D)  $\mathrm { A } = \mathrm { P } \times ( 1 + \mathrm { APR } ) ^ { \mathrm { Y } }$ 
A)  $A = P \left( 1 + \frac { A P R } { n } \right) ^ { n Y }$ 
B)  $\mathrm { A } = \mathrm { P } \times ( 1 + \mathrm { APR } ) ^ { \mathrm { n } Y }$ 
C)  $A = P \left( 1 + \frac { A P R } { Y } \right) ^ { Y }$ 
D)  $\mathrm { A } = \mathrm { P } \times ( 1 + \mathrm { APR } ) ^ { \mathrm { Y } }$

Question 18

Use the compound interest formula for continuous compounding to determine the accumulated balance after the statedperiod.
-A $49,433 deposit in an account with an APR of 3.6% compounded continuously for 10 years.

Accepted Answer

A) $70,739.76 
B) $70,406.78 
C) $70,853.77 
D) $69,044.06 
A) $70,739.76 
B) $70,406.78 
C) $70,853.77 
D) $69,044.06

Question 19

Use the compound interest formula for compounding more than once a year to determine the accumulated balance afterthe stated period.
-$1200 deposit at an APR of 2% with quarterly compounding for 2 years

Accepted Answer

A) $1248.48 
B) $1212.03 
C) $1248.00 
D) $1248.85 
A) $1248.48 
B) $1212.03 
C) $1248.00 
D) $1248.85

Question 20

Solve the problem.
-  Suppose you had invested $7000 in this fund 5 years ago. How much would your investment be worth now?

Accepted Answer

A) $7526.14 
B) $6051.53 
C) $6503.70 
D) $8063.84 
A) $7526.14 
B) $6051.53 
C) $6503.70 
D) $8063.84

Provide an appropriate response. -________ is interest paid only on the original principal, and not on any interest added at later dates.

Solve the problem. Refer to the table if necessary. -Andy earned $74,358 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard Deduction.

Compute the total and annual returns on the described investment. -Five years after buying 200 shares of $X Y Z$ stock for $\$ 30$ per share, you sell the stock for $\$ 10,000$ .

Provide an appropriate response. -What type of spending is easiest for the government to control?

Decide whether the statement makes sense. Explain your reasoning. -I have a 30-year mortgage and have been paying it off for 6 years now so I should have paid off about one fifth of the principal by now.

Solve the equation for the unknown quantity. - $8 x = 56$

Find the annual percentage yield (APY). -A bank offers an APR of 2.2% compounded daily.

Provide an appropriate response. -A mortgage lender will typically require a down payment of 40% to 50% of the purchase price.

Calculate the balance under the given assumptions. -Find the savings plan balance after 25 months with an APR of 3% and monthly payments of $476.

Solve the problem. -Calculate the current yield for a $1000 Treasury bond with a coupon rate of 2.5% that has a market value of $750.

Solve the problem. -$5832 is deposited into a savings account at 9% interest, compounded monthly. To the nearest year, how long will it take for the account balance to reach $1,000,000?

Solve. -Determine the total payment over the term of a student loan of $60,097 at a fixed APR of 7% for 20 years.

Solve the equation for the unknown quantity. - $\mathrm { t } - 7 = 11$

Provide an appropriate response. -What is the compound interest formula for interest paid more than once a year?

Use the compound interest formula for continuous compounding to determine the accumulated balance after the statedperiod. -A $49,433 deposit in an account with an APR of 3.6% compounded continuously for 10 years.

Use the compound interest formula for compounding more than once a year to determine the accumulated balance afterthe stated period. -$1200 deposit at an APR of 2% with quarterly compounding for 2 years

Solve the problem. - Suppose you had invested $7000 in this fund 5 years ago. How much would your investment be worth now?

Thinking Critically

Approaches to Problem Solving

Numbers in the Real World

Statistical Reasoning

Putting Statistics to Work

Probability: Living With the Odds

Exponential Astonishment

Modeling Our World

Modeling With Geometry

Mathematics and the Arts

Filters

Exam 4: Managing Money