Question 1

The future value of $500 invested at the end of each of the next three years is $1,555 (assuming a 10% interest rate).

Accepted Answer

A) True 
 B)False

Question 2

An important part of goal planning is adjusting present values for expected inflation.

Accepted Answer

A) True 
 B)False

Question 3

Compounding refers to the

Accepted Answer

A) mistake of confusing present values with future values. 
B) process of accumulating value over time. 
C) task of finding a present value. 
D) projection of future payments. 
A) mistake of confusing present values with future values. 
B) process of accumulating value over time. 
C) task of finding a present value. 
D) projection of future payments.

Question 4

If the future value of an ordinary annuity is $8,000,the future value of an annuity due is $7,200 given a 10% interest rate.

Accepted Answer

A) True 
 B)False

Question 5

The future value of a $500 annuity due received for three years is $________,assuming an investment rate of 10%.

Accepted Answer

A) 1,655.00 
B) 665.50 
C) 1,820.50 
D) 335.65 
A) 1,655.00 
B) 665.50 
C) 1,820.50 
D) 335.65

Question 6

Assuming a discount rate of 10%,the present value of $1,000 received two years from now is

Accepted Answer

A) $800.00. 
B) $826.45. 
C) $899.90 
D) $900.00 
A) $800.00. 
B) $826.45. 
C) $899.90 
D) $900.00

Question 7

Given identical data,the future value of annuity due is always greater than the future value of an ordinary annuity.

Accepted Answer

A) True 
 B)False

Question 8

You have just put $500 in an investment that offers an 8% annual yield,with interest compounded annually.Your total interest earned after two years will be

Accepted Answer

A) $83.20. 
B) $80.00. 
C) $44.60. 
D) $40.00. 
A) $83.20. 
B) $80.00. 
C) $44.60. 
D) $40.00.

Question 9

An ordinary annuity assumes ________-of-period payments,while an annuity due assumes ________-of-period payments.

Accepted Answer

A) end;beginning 
B) beginning;end 
C) end;middle 
D) beginning;middle 
A) end;beginning 
B) beginning;end 
C) end;middle 
D) beginning;middle

Question 10

The future value of $5,000 invested today at 3% interest compounded annually for 5 years is

Accepted Answer

A) $5,255. 
B) $5,520. 
C) $5,628. 
D) $5,796. 
A) $5,255. 
B) $5,520. 
C) $5,628. 
D) $5,796.

Question 11

A simple interest calculation assumes you reinvest all interest earned in the investment.

Accepted Answer

A) True 
 B)False

Question 12

Making goals concrete begins by determining their costs if they were undertaken today.

Accepted Answer

A) True 
 B)False

Question 13

At an interest rate of 10% it will take approximately how many years to double your investment?

Accepted Answer

A) Less than five years 
B) Between 7 and 8 years 
C) Between 9 and 10 years 
D) More than 10 years 
A) Less than five years 
B) Between 7 and 8 years 
C) Between 9 and 10 years 
D) More than 10 years

Question 14

John cashed in an annuity contract and received $10,000.John bought the contract 24 years ago for $5,000.These amounts indicate a contract rate of approximately 3%.

Accepted Answer

A) True 
 B)False

Question 15

You invest $100 today in a two-year certificate of deposit that pays a 10% annual interest rate compounded annually.At maturity,your CD will give you $120.

Accepted Answer

A) True 
 B)False

Question 16

You expect a 3% rate of inflation to continue indefinitely into the future.A $10,000 vacation today will cost $________ twenty years from now.(Table or calculator required. )

Accepted Answer

A) 10,300 
B) 14,988 
C) 18,061 
D) 42,944 
A) 10,300 
B) 14,988 
C) 18,061 
D) 42,944

Question 17

A savings schedule with a zero ending balance means that

Accepted Answer

A) annual deposits are sufficient to meet all goals. 
B) more savings are needed each year. 
C) the most desirable schedule has been determined. 
D) some goals will not be achieved. 
A) annual deposits are sufficient to meet all goals. 
B) more savings are needed each year. 
C) the most desirable schedule has been determined. 
D) some goals will not be achieved.

Question 18

An annual required savings amount confirms our computational accuracy but does not necessarily imply that our savings plan will use that amount each year.

Accepted Answer

A) True 
 B)False

Question 19

At 12% interest (compounded annually),$20,000 invested today will grow to $________ in three years.

Accepted Answer

A) 27,200 
B) 28,099 
C) 31,471 
D) 40,000 
A) 27,200 
B) 28,099 
C) 31,471 
D) 40,000

Question 20

With an interest rate of 9%,$5,000 will grow to $10,000 in approximately

Accepted Answer

A) 8 years. 
B) 4 years. 
C) 12 years. 
D) 24 years. 
A) 8 years. 
B) 4 years. 
C) 12 years. 
D) 24 years.

The future value of $500 invested at the end of each of the next three years is $1,555 (assuming a 10% interest rate).

An important part of goal planning is adjusting present values for expected inflation.

Compounding refers to the

If the future value of an ordinary annuity is $8,000,the future value of an annuity due is $7,200 given a 10% interest rate.

The future value of a $500 annuity due received for three years is $________,assuming an investment rate of 10%.

Assuming a discount rate of 10%,the present value of $1,000 received two years from now is

Given identical data,the future value of annuity due is always greater than the future value of an ordinary annuity.

You have just put $500 in an investment that offers an 8% annual yield,with interest compounded annually.Your total interest earned after two years will be

An ordinary annuity assumes -of-period payments,while an annuity due assumes -of-period payments.

The future value of $5,000 invested today at 3% interest compounded annually for 5 years is

A simple interest calculation assumes you reinvest all interest earned in the investment.

Making goals concrete begins by determining their costs if they were undertaken today.

At an interest rate of 10% it will take approximately how many years to double your investment?

John cashed in an annuity contract and received $10,000.John bought the contract 24 years ago for $5,000.These amounts indicate a contract rate of approximately 3%.

You invest $100 today in a two-year certificate of deposit that pays a 10% annual interest rate compounded annually.At maturity,your CD will give you $120.

You expect a 3% rate of inflation to continue indefinitely into the future.A $10,000 vacation today will cost $________ twenty years from now.(Table or calculator required. )

A savings schedule with a zero ending balance means that

An annual required savings amount confirms our computational accuracy but does not necessarily imply that our savings plan will use that amount each year.

At 12% interest (compounded annually),$20,000 invested today will grow to $________ in three years.

With an interest rate of 9%,$5,000 will grow to $10,000 in approximately

Financial Planning: Why Its Important to You

Financial Statement and Budgets: Where Are You Now and Where Are You Going

Taxes: the Governments Share of Your Rewards

Liquidity Management: Managing Current Assets and Current Liabilities

Short-Term Credit Management: Consumer Credit

Consumer Durables: the Personal Auto

Housing: the Cost of Shelter

Financial Markets and Instruments: Learning the Investment Environment

Investment Basics: Understanding Risk and Return

Stocks and Bonds: Your Most Common Investments

Mutual Fundsother Pooling Arrangements: Simplifying, Maybe Improving Investment Performance

Property and Liability Insurance: Protecting Your Lifestyle Assets

Health Care and Disability Insurance: Protecting Your Earning Capacity

Life Insurance and Estate Planning: Protecting Your Dependents

Retirement Planning: Planning for Your Long-Term Needs

Filters

Exam 2: The Time Value of Money: All Dollars Are Not Created Equal

The future value of $500 invested at the end of each of the next three years is $1,555 (assuming a 10% interest rate).

An important part of goal planning is adjusting present values for expected inflation.

Compounding refers to the

If the future value of an ordinary annuity is $8,000,the future value of an annuity due is $7,200 given a 10% interest rate.

The future value of a $500 annuity due received for three years is $________,assuming an investment rate of 10%.

Assuming a discount rate of 10%,the present value of $1,000 received two years from now is

Given identical data,the future value of annuity due is always greater than the future value of an ordinary annuity.

You have just put $500 in an investment that offers an 8% annual yield,with interest compounded annually.Your total interest earned after two years will be

An ordinary annuity assumes ________-of-period payments,while an annuity due assumes ________-of-period payments.

The future value of $5,000 invested today at 3% interest compounded annually for 5 years is

A simple interest calculation assumes you reinvest all interest earned in the investment.

Making goals concrete begins by determining their costs if they were undertaken today.

At an interest rate of 10% it will take approximately how many years to double your investment?

John cashed in an annuity contract and received $10,000.John bought the contract 24 years ago for $5,000.These amounts indicate a contract rate of approximately 3%.

You invest $100 today in a two-year certificate of deposit that pays a 10% annual interest rate compounded annually.At maturity,your CD will give you $120.

You expect a 3% rate of inflation to continue indefinitely into the future.A $10,000 vacation today will cost $________ twenty years from now.(Table or calculator required. )

A savings schedule with a zero ending balance means that

An annual required savings amount confirms our computational accuracy but does not necessarily imply that our savings plan will use that amount each year.

At 12% interest (compounded annually),$20,000 invested today will grow to $________ in three years.

With an interest rate of 9%,$5,000 will grow to $10,000 in approximately

Financial Planning: Why Its Important to You

Financial Statement and Budgets: Where Are You Now and Where Are You Going

Taxes: the Governments Share of Your Rewards

Liquidity Management: Managing Current Assets and Current Liabilities

Short-Term Credit Management: Consumer Credit

Consumer Durables: the Personal Auto

Housing: the Cost of Shelter

Financial Markets and Instruments: Learning the Investment Environment

Investment Basics: Understanding Risk and Return

Stocks and Bonds: Your Most Common Investments

Mutual Fundsother Pooling Arrangements: Simplifying, Maybe Improving Investment Performance

Property and Liability Insurance: Protecting Your Lifestyle Assets

Health Care and Disability Insurance: Protecting Your Earning Capacity

Life Insurance and Estate Planning: Protecting Your Dependents

Retirement Planning: Planning for Your Long-Term Needs

Filters

An ordinary annuity assumes -of-period payments,while an annuity due assumes -of-period payments.