Question 1

Is the effective rate of interest ever equal to the nominal interest rate?

Accepted Answer

A) True 
 B)False

Question 2

Bobby invested $1,000 for five years. For the first two years he earned 9% compounded monthly. For the next two years he earned 11% compounded quarterly. For the final year he earned 14% compounded semi-annually. What was his effective rate of return over the five years?

Accepted Answer

A)  14.49% 
B)  11.22% 
C)  10.80% 
D)  13.38% 
E)  13.99% 
A)  14.49% 
B)  11.22% 
C)  10.80% 
D)  13.38% 
E)  13.99%

Question 3

A $50,000 strip bond was discounted to $21,680. The market rate was 7.4% compounded semi-annually. How much time was left before the bond reached maturity?

Accepted Answer

A)  11.5 years 
B)  21.9 years 
C)  11.7 years 
D)  5.04 years 
E)  23 years 
A)  11.5 years 
B)  21.9 years 
C)  11.7 years 
D)  5.04 years 
E)  23 years

Question 4

Sollozo just made a single payment to repay a loan he had with the Corleone Finance Company. He paid a total of $86,500 which included interest of $56,500 at 48% compounded monthly. How long ago was the money borrowed?

Accepted Answer

A)  19 months 
B)  63 months 
C)  27 months 
D)  34 months 
E)  47 months 
A)  19 months 
B)  63 months 
C)  27 months 
D)  34 months 
E)  47 months

Question 5

A $1,000 five-year compound-interest GIC matured at $1,234.01. What semiannually compounded rate of interest did it earn?

Accepted Answer

4.25% comp

Question 6

Determine the rate at which money will quadruple in 20 years if interest is compounded monthly.

Accepted Answer

A)  6.05% 
B)  6.35% 
C)  6.65% 
D)  6.95% 
E)  7.05% 
A)  6.05% 
B)  6.35% 
C)  6.65% 
D)  6.95% 
E)  7.05%

Question 7

Determine how long will take to triple money given an interest rate of 4.39% compounded monthly. Calculate to the nearest day.

Accepted Answer

A)  25 years and 26 days 
B)  24 years and 46 days 
C)  23 years and 60 days 
D)  22 years and 90 days 
E)  20 years and 60 days 
A)  25 years and 26 days 
B)  24 years and 46 days 
C)  23 years and 60 days 
D)  22 years and 90 days 
E)  20 years and 60 days

Question 8

An investor's portfolio increased in value from $100,000 to $193,000 over a seven-year period in which the Consumer Price Index rose from 95.6 to 115.3. What was the compound annual real rate of return on the portfolio during the period?

Accepted Answer

6.95% comp

Question 9

If the population of Green City is growing at a rate of 5% per year, how long will it take to grow from 2,300 to 10,000?

Accepted Answer

A)  17 years 
B)  20 years 
C)  23 years 
D)  25 years 
E)  30 years 
A)  17 years 
B)  20 years 
C)  23 years 
D)  25 years 
E)  30 years

Question 10

Calculate nominal rate of interest (to the nearest 0.01%):

Accepted Answer

7.20% comp

Question 11

An effective rate of 14.9% has a nominal rate of 14.38% based on semi-annual compounding.

Accepted Answer

A) True 
 B)False

Question 12

What was the annually compounded nominal rate of growth if the future value of $1,000 after 20 years was $2321.06?

Accepted Answer

4.3% compo

Question 13

What is the term of a compound-interest Guaranteed Investment Certificate if $8,500 invested at 6.1% compounded annually will earn interest totaling $4,365.50?

Accepted Answer

A)  11.25 years 
B)  10.59 years 
C)  8.50 years 
D)  7.75 years 
E)  7.00 years 
A)  11.25 years 
B)  10.59 years 
C)  8.50 years 
D)  7.75 years 
E)  7.00 years

Question 14

Calculate the equivalent interest rate (to the nearest 0.01%)

Accepted Answer

9.76% comp

Question 15

Calculate the equivalent interest rate (to the nearest 0.01%)

Accepted Answer

10.13% com

Question 16

Calculate the equivalent interest rate (to the nearest 0.01%)

Accepted Answer

10.21% com

Question 17

Is it possible for a capital loss to be worse than -100%? Explain or give an example.

Accepted Answer

A) True 
 B)False

Question 18

Mr. and Mrs. Markovich note that the home they purchased 20 years ago for $70,000 is now appraised at $340,000. What was the (equivalent) annual rate of appreciation in the value of their home during the 20-year period?

Accepted Answer

The answer of Mr. and Mrs. Markovich note that the...

Question 19

Enrique wants to borrow $15,000 for a new car. The bank has personal loans at 5.25% compounded monthly, whereas the credit union at his company is offering personal loans at 5.5% compounded annually. Which should Enrique accept?

Accepted Answer

5.25% comp

Question 20

A $50,000 GIC will earn $70,000 of interest over its 10-year term. What is the monthly compounded nominal rate of interest?

Accepted Answer

A)  7.32% 
B)  9.15% 
C)  3.37% 
D)  8.79% 
E)  3.42% 
A)  7.32% 
B)  9.15% 
C)  3.37% 
D)  8.79% 
E)  3.42%

Is the effective rate of interest ever equal to the nominal interest rate?

Bobby invested $1,000 for five years. For the first two years he earned 9% compounded monthly. For the next two years he earned 11% compounded quarterly. For the final year he earned 14% compounded semi-annually. What was his effective rate of return over the five years?

A $50,000 strip bond was discounted to $21,680. The market rate was 7.4% compounded semi-annually. How much time was left before the bond reached maturity?

Sollozo just made a single payment to repay a loan he had with the Corleone Finance Company. He paid a total of $86,500 which included interest of $56,500 at 48% compounded monthly. How long ago was the money borrowed?

A $1,000 five-year compound-interest GIC matured at $1,234.01. What semiannually compounded rate of interest did it earn?

Determine the rate at which money will quadruple in 20 years if interest is compounded monthly.

Determine how long will take to triple money given an interest rate of 4.39% compounded monthly. Calculate to the nearest day.

An investor's portfolio increased in value from $100,000 to $193,000 over a seven-year period in which the Consumer Price Index rose from 95.6 to 115.3. What was the compound annual real rate of return on the portfolio during the period?

If the population of Green City is growing at a rate of 5% per year, how long will it take to grow from 2,300 to 10,000?

Calculate nominal rate of interest (to the nearest 0.01%):

An effective rate of 14.9% has a nominal rate of 14.38% based on semi-annual compounding.

What was the annually compounded nominal rate of growth if the future value of $1,000 after 20 years was $2321.06?

What is the term of a compound-interest Guaranteed Investment Certificate if $8,500 invested at 6.1% compounded annually will earn interest totaling $4,365.50?

Calculate the equivalent interest rate (to the nearest 0.01%)

Calculate the equivalent interest rate (to the nearest 0.01%)

Calculate the equivalent interest rate (to the nearest 0.01%)

Is it possible for a capital loss to be worse than -100%? Explain or give an example.

Mr. and Mrs. Markovich note that the home they purchased 20 years ago for $70,000 is now appraised at $340,000. What was the (equivalent) annual rate of appreciation in the value of their home during the 20-year period?

Enrique wants to borrow $15,000 for a new car. The bank has personal loans at 5.25% compounded monthly, whereas the credit union at his company is offering personal loans at 5.5% compounded annually. Which should Enrique accept?

A $50,000 GIC will earn $70,000 of interest over its 10-year term. What is the monthly compounded nominal rate of interest?

Review and Applications of Basic Mathematics

Review and Applications of Algebra

Ratios and Proportions

Mathematics of Merchandising

Cost-Volume-Profit Analysis

Simple Interest

Applications of Simple Interest

Compound Interest: Future Value and Present Value

Annuities: Future Value and Present Value

Annuities: Periodic Payment, Number of Payments, and Interest Rate

Annuities: Special Situations

Loan Amortization: Mortgages

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Exam 9: Compound Interest: Further Topics and Applications

Is the effective rate of interest ever equal to the nominal interest rate?

Bobby invested $1,000 for five years. For the first two years he earned 9% compounded monthly. For the next two years he earned 11% compounded quarterly. For the final year he earned 14% compounded semi-annually. What was his effective rate of return over the five years?

A $50,000 strip bond was discounted to $21,680. The market rate was 7.4% compounded semi-annually. How much time was left before the bond reached maturity?

Sollozo just made a single payment to repay a loan he had with the Corleone Finance Company. He paid a total of $86,500 which included interest of $56,500 at 48% compounded monthly. How long ago was the money borrowed?

A $1,000 five-year compound-interest GIC matured at $1,234.01. What semiannually compounded rate of interest did it earn?

Determine the rate at which money will quadruple in 20 years if interest is compounded monthly.

Determine how long will take to triple money given an interest rate of 4.39% compounded monthly. Calculate to the nearest day.

An investor's portfolio increased in value from $100,000 to $193,000 over a seven-year period in which the Consumer Price Index rose from 95.6 to 115.3. What was the compound annual real rate of return on the portfolio during the period?

If the population of Green City is growing at a rate of 5% per year, how long will it take to grow from 2,300 to 10,000?

Calculate nominal rate of interest (to the nearest 0.01%):

An effective rate of 14.9% has a nominal rate of 14.38% based on semi-annual compounding.

What was the annually compounded nominal rate of growth if the future value of $1,000 after 20 years was $2321.06?

What is the term of a compound-interest Guaranteed Investment Certificate if $8,500 invested at 6.1% compounded annually will earn interest totaling $4,365.50?

Calculate the equivalent interest rate (to the nearest 0.01%)

Calculate the equivalent interest rate (to the nearest 0.01%)

Calculate the equivalent interest rate (to the nearest 0.01%)

Is it possible for a capital loss to be worse than -100%? Explain or give an example.

Mr. and Mrs. Markovich note that the home they purchased 20 years ago for $70,000 is now appraised at $340,000. What was the (equivalent) annual rate of appreciation in the value of their home during the 20-year period?

Enrique wants to borrow $15,000 for a new car. The bank has personal loans at 5.25% compounded monthly, whereas the credit union at his company is offering personal loans at 5.5% compounded annually. Which should Enrique accept?

A $50,000 GIC will earn $70,000 of interest over its 10-year term. What is the monthly compounded nominal rate of interest?

Review and Applications of Basic Mathematics

Review and Applications of Algebra

Ratios and Proportions

Mathematics of Merchandising

Cost-Volume-Profit Analysis

Simple Interest

Applications of Simple Interest

Compound Interest: Future Value and Present Value

Annuities: Future Value and Present Value

Annuities: Periodic Payment, Number of Payments, and Interest Rate

Annuities: Special Situations

Loan Amortization: Mortgages

Filters