Question 1

What is the annual interest rate earned on a deposit that grew from $250 to $502.84 over the last 5 years?

Accepted Answer

A)  15% 
B)  13% 
C)  11% 
D)  9% 
A)  15% 
B)  13% 
C)  11% 
D)  9%

Question 2

Arnold learned something very valuable as a teenager from his dad. He was told to invest $1,000 at 12% interest at age 20 and leave it alone until age 65. Arnold's dad knew that one strategy that wealthy people use is to exercise self-discipline to never touch this long-term plan. Arnold is very happy he applied his dad's advice.
-Approximately how long will it take Arnold's savings to grow into $2,000?

Accepted Answer

A)  60 months. 
B)  5 years. 
C)  8.5 years. 
D)  6 years. 
A)  60 months. 
B)  5 years. 
C)  8.5 years. 
D)  6 years.

Question 3

You have been saving for five years toward the purchase of a new mountain bike. You placed $600 in a bank account and have earned an annual rate of return of 12%. How much do you now have in your bank account?

Accepted Answer

A)  $1,057.41 
B)  $1,293.71 
C)  $978.70 
D)  $1,138.70 
A)  $1,057.41 
B)  $1,293.71 
C)  $978.70 
D)  $1,138.70

Question 4

Suppose that you want to purchase some land to build a homestead in the future. You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years. Assuming no down payment is required, how much can you borrow if the bank will charge you an annual interest rate of 12%?

Accepted Answer

A)  $100,985.45 
B)  $48,231.47 
C)  $37,347.22 
D)  $160,262.21 
A)  $100,985.45 
B)  $48,231.47 
C)  $37,347.22 
D)  $160,262.21

Question 5

This helpful investment rule-of-thumb tells you approximately how many years it takes for a sum of money to double in size.

Accepted Answer

A)  rule of compound interest 
B)  rule of 72 
C)  rule of 100 
D)  rule of future value 
E)  rule of annuity doubling 
A)  rule of compound interest 
B)  rule of 72 
C)  rule of 100 
D)  rule of future value 
E)  rule of annuity doubling

Question 6

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

Accepted Answer

A)  $5,098 
B)  $7,722 
C)  $8,775 
D)  $9,112 
A)  $5,098 
B)  $7,722 
C)  $8,775 
D)  $9,112

Question 7

The dollar value of an investment at some future point in time is also known as

Accepted Answer

A)  future value. 
B)  present value. 
C)  compounded annuity. 
D)  the time value of money. 
E)  calculated value. 
A)  future value. 
B)  present value. 
C)  compounded annuity. 
D)  the time value of money. 
E)  calculated value.

Question 8

You just purchased a vacant lot for your future home for $50,000 and financed that amount over 96 months. If your interest rate is 9.25% compounded monthly, which of the following is closest to your monthly payment?

Accepted Answer

A)  $744.55 
B)  $853.60 
C)  $767.23 
D)  $739.02 
E)  $810.92 
A)  $744.55 
B)  $853.60 
C)  $767.23 
D)  $739.02 
E)  $810.92

Question 9

Is it possible to create a retirement estate of $585,000 instead of $310,000 without requiring much more to be invested every month?

Accepted Answer

A)  probably not with inflation working against you 
B)  depends upon the interest rate or return you earn on the investment as well as the number of years until retirement. 
C)  absolutely not 
D)  there is not enough information available to answer this question 
A)  probably not with inflation working against you 
B)  depends upon the interest rate or return you earn on the investment as well as the number of years until retirement. 
C)  absolutely not 
D)  there is not enough information available to answer this question

Question 10

Describe the two factors that affect how much we need to save to achieve financial goals.

Accepted Answer

The two variable factors that affect tot

Question 11

With a mortgage loan of $150,000 at an annual percentage rate of 6% for 30 years, you will pay over $150,000 in interest before your loan ends.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that you placed $500 in a bank account at the end of each year for the next 10 years. How much would be in that account at the end of the tenth year if the deposits earned an annual rate of return of 8% each year?

Accepted Answer

A)  $8,079.46 
B)  $5400.00 
C)  $7,243.28 
D)  $6,355.04 
E)  $7,774.51 
A)  $8,079.46 
B)  $5400.00 
C)  $7,243.28 
D)  $6,355.04 
E)  $7,774.51

Question 13

Define an amortized loan and give two common examples.

Accepted Answer

An amortized loan is a loan paid off in

Question 14

Most people achieve comfortable retirements by postponing saving until after age 50, when they are able to save a large amount on a regular basis.

Accepted Answer

A) True 
 B)False

Question 15

You have just placed $500 in a bank account that earns an annual rate of return of 6%. How much will you have in that bank account after 6 years?

Accepted Answer

A)  $652.48 
B)  $709.26 
C)  $787.66 
D)  $758.66 
E)  $801.68 
A)  $652.48 
B)  $709.26 
C)  $787.66 
D)  $758.66 
E)  $801.68

Question 16

The earlier you begin saving for your retirement, the easier it will be to reach your financial goals for retirement.

Accepted Answer

A) True 
 B)False

Question 17

Suppose you borrowed $12,000 at an annual rate of 6 percent interest to buy a car and wish to repay it in five equal payments at the end of each of the next five years. Which of the following is the closest to the amount of each of these payments?

Accepted Answer

A)  $2,364 
B)  $2,849 
C)  $2,544 
D)  $2,436 
A)  $2,364 
B)  $2,849 
C)  $2,544 
D)  $2,436

Question 18

What is the present value of $500 received at the end of each of the next 5 years worth to you today at the appropriate discount rate of 6%?

Accepted Answer

A)  $1,105 
B)  $1,850 
C)  $2,106 
D)  $2,778 
A)  $1,105 
B)  $1,850 
C)  $2,106 
D)  $2,778

Question 19

If your bank pays you interest in the form of an annual rate of return of 10% over each of the next five years, how much will your balance be if you make annual deposits of $400?

Accepted Answer

A)  $2,248.37 
B)  $2,644.20 
C)  $2,516.31 
D)  $2,442.04 
A)  $2,248.37 
B)  $2,644.20 
C)  $2,516.31 
D)  $2,442.04

Question 20

Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars in a bank account that will earn an annual rate of return of 6%. If you graduate in four years, how much will be in your party account?

Accepted Answer

A)  $7,120.89 
B)  $6,142.96 
C)  $5,960.47 
D)  $6,312.38 
A)  $7,120.89 
B)  $6,142.96 
C)  $5,960.47 
D)  $6,312.38

What is the annual interest rate earned on a deposit that grew from $250 to $502.84 over the last 5 years?

You have been saving for five years toward the purchase of a new mountain bike. You placed $600 in a bank account and have earned an annual rate of return of 12%. How much do you now have in your bank account?

Suppose that you want to purchase some land to build a homestead in the future. You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years. Assuming no down payment is required, how much can you borrow if the bank will charge you an annual interest rate of 12%?

This helpful investment rule-of-thumb tells you approximately how many years it takes for a sum of money to double in size.

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

The dollar value of an investment at some future point in time is also known as

You just purchased a vacant lot for your future home for $50,000 and financed that amount over 96 months. If your interest rate is 9.25% compounded monthly, which of the following is closest to your monthly payment?

Is it possible to create a retirement estate of $585,000 instead of $310,000 without requiring much more to be invested every month?

Describe the two factors that affect how much we need to save to achieve financial goals.

With a mortgage loan of $150,000 at an annual percentage rate of 6% for 30 years, you will pay over $150,000 in interest before your loan ends.

Suppose that you placed $500 in a bank account at the end of each year for the next 10 years. How much would be in that account at the end of the tenth year if the deposits earned an annual rate of return of 8% each year?

Define an amortized loan and give two common examples.

Most people achieve comfortable retirements by postponing saving until after age 50, when they are able to save a large amount on a regular basis.

You have just placed $500 in a bank account that earns an annual rate of return of 6%. How much will you have in that bank account after 6 years?

The earlier you begin saving for your retirement, the easier it will be to reach your financial goals for retirement.

Suppose you borrowed $12,000 at an annual rate of 6 percent interest to buy a car and wish to repay it in five equal payments at the end of each of the next five years. Which of the following is the closest to the amount of each of these payments?

What is the present value of $500 received at the end of each of the next 5 years worth to you today at the appropriate discount rate of 6%?

If your bank pays you interest in the form of an annual rate of return of 10% over each of the next five years, how much will your balance be if you make annual deposits of $400?

Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars in a bank account that will earn an annual rate of return of 6%. If you graduate in four years, how much will be in your party account?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters

Exam 3: Understanding and Appreciating the Time Value of Money

What is the annual interest rate earned on a deposit that grew from $250 to $502.84 over the last 5 years?

You have been saving for five years toward the purchase of a new mountain bike. You placed $600 in a bank account and have earned an annual rate of return of 12%. How much do you now have in your bank account?

Suppose that you want to purchase some land to build a homestead in the future. You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years. Assuming no down payment is required, how much can you borrow if the bank will charge you an annual interest rate of 12%?

This helpful investment rule-of-thumb tells you approximately how many years it takes for a sum of money to double in size.

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

The dollar value of an investment at some future point in time is also known as

You just purchased a vacant lot for your future home for $50,000 and financed that amount over 96 months. If your interest rate is 9.25% compounded monthly, which of the following is closest to your monthly payment?

Is it possible to create a retirement estate of $585,000 instead of $310,000 without requiring much more to be invested every month?

Describe the two factors that affect how much we need to save to achieve financial goals.

With a mortgage loan of $150,000 at an annual percentage rate of 6% for 30 years, you will pay over $150,000 in interest before your loan ends.

Suppose that you placed $500 in a bank account at the end of each year for the next 10 years. How much would be in that account at the end of the tenth year if the deposits earned an annual rate of return of 8% each year?

Define an amortized loan and give two common examples.

Most people achieve comfortable retirements by postponing saving until after age 50, when they are able to save a large amount on a regular basis.

You have just placed $500 in a bank account that earns an annual rate of return of 6%. How much will you have in that bank account after 6 years?

The earlier you begin saving for your retirement, the easier it will be to reach your financial goals for retirement.

Suppose you borrowed $12,000 at an annual rate of 6 percent interest to buy a car and wish to repay it in five equal payments at the end of each of the next five years. Which of the following is the closest to the amount of each of these payments?

What is the present value of $500 received at the end of each of the next 5 years worth to you today at the appropriate discount rate of 6%?

If your bank pays you interest in the form of an annual rate of return of 10% over each of the next five years, how much will your balance be if you make annual deposits of $400?

Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars in a bank account that will earn an annual rate of return of 6%. If you graduate in four years, how much will be in your party account?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: The Role of Open Credit

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters