Finance > QUESTIONS & ANSWERS > FINANCE140 fin q3 QUESTIONS WITH CORRECT AND VERIFIED ANSWERS,VERY USEFUL WHEN PRERARING FOR EXAMS.1 (All)

Question 1 0 out of 2.5 points Your grandfather has left you $150,000 in a trust funds that you cannot have for another seven years. You have decided that you really need this money now to pay for... your college expenses. Your attorney offers you $80,000 for an assignment of the proceeds of the trust. If you can get a student loan at 10%, should you accept your attorneys offer? Answer Selected Answer: No, because the $150,000 is worth more than $80,000 today. Correct Answer: Yes, because the $150,000 is worth less than $80,000 today. Question 2 0 out of 2.5 points Assume that you can invest to earn a stated annual rate of return of 12%, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Answer Selected Answer: [None Given] Correct Answer: $62,527.47 Question 3 0 out of 2.5 points The price of a Wendys Bacon Cheeseburger is $.99, the same it was five years ago. Had the price of this sandwich increased at the same 3% annual rate as U.S. consumer prices did over the last five years, what would its price be today? Answer Selected Answer: [None Given] Correct Answer:$1.15 Question 4 0 out of 2.5 points The Vanguard Windsor II mutual fund had a net asset value of $15.07 at the beginning of 1992 and $24.04 at the beginning of 1997. What was the approximate average annual growth rate in this measure over this period? Answer Selected Answer: [None Given] Correct Answer: 10% Question 5 0 out of 2.5 points Tony plans to deposit $1,000 at the end of each of the next three years. If his funds earn 5% compounded annually, how much will he have at the end of three years? Answer Selected Answer: [None Given] Correct Answer: $3,175.50 Question 6 0 out of 2.5 points The future value of a $10000 annuity deposited at 12 percent compounded annually for each of next 5 years is Answer Selected Answer: [None Given] Correct Answer: $71154 Question 7 0 out of 2.5 pointsMost people prefer to receive money today rather than ten years from now because Answer Selected Answer: [None Given] Correct Answer: receiving cash today enables one to take advantage of current investment opportunities. Question 8 0 out of 2.5 points The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The later we are in the loan's life, the larger the principal portion of the payment. Answer Selected Answer: [None Given] Correct Answer: True Question 9 0 out of 2.5 points Which of the following problems could not be addressed by using compounding or discounting techniques? Answer Selected Answer: [None Given] Correct Answer: Calculating the length of time needed for the supply and demand for loanable funds to equate if interest rates are above the equilibrium level. Question 10 0 out of 2.5 points As the discount rate increses without limit, the present value of the future cash inflows Answer Selected Answer: [None Given] CorrectAnswer: Approaches zero. Question 11 0 out of 2.5 points What is the future value of $124.49 after earning simple interest for five years at an annual rate of 10%? Answer Selected Answer: [None Given] Correct Answer: $186.74 Question 12 0 out of 2.5 points For all positive interest rates, FVIFk,n >= 1.0 and PVIFAk,n >= n. Answer Selected Answer: [None Given] Correct Answer: False Question 13 0 out of 2.5 points You expect to receive $1,000 at the end of each of the next three years. You will deposit these payments into an account which pays 10% compounded semiannually. What is the future value of these payments, that is , the value of at the end of the third year. Answer Selected Answer: [None Given] Correct Answer: $3,318,01 Question 14 0 out of 2.5 points The primary difference between simple and compound interest is that AnswerSelected Answer: [None Given] Correct Answer: compound interest entails receiving interest payments on previously earned interest. Question 15 0 out of 2.5 points You plan to invest $2,500 in a money market account which will pay an annual stated (nominal) intereest rate of 8.75%, but which compounds interest on a weekly basis. If you leave this money on deposit for one year (52 weeks), what will be your ending balance when you close the account? Answer Selected Answer: [None Given] Correct Answer: $2,728.50 Question 16 0 out of 2.5 points What is the effective interest rate of 4% compounded quarterly? Answer Selected Answer: [None Given] Correct Answer: 4.06% Question 17 0 out of 2.5 points An ordinary annuity may be defined as Answer Selected Answer: [None Given] Correct Answer: a series of equal payments made at regular intervals that are received at the end of each period. Question 18 0 out of 2.5 points The future value of an ordinary annuity of $1000 each year for 10 years,deposited at 3 percent,is Answer Selected Answer: [None Given] Correct Answer: $11464 Question 19 0 out of 2.5 points The annual percentage yeild(APY)is the effective rate of interest thata must be disclosed to customers by banks on their savings products as a result of "truth in savings laws." Answer Selected Answer: [None Given] Correct Answer: True Question 20 0 out of 2.5 points Future value is the value of a future amount at the present time, found by applying compound interest over a specific period of time. Answer Selected Answer: [None Given] Correct Answer: False Question 21 0 out of 2.5 points What is the rate of return on an investment of $16278 if the company expects to receive $3000 per year for the next ten years? Answer Selected Answer: [None Given]Correct Answer: 13 percent Question 22 0 out of 2.5 points Assume you are to receive a 20-year annuity with annual payments of $50. The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 20. You will invest each payment in an account that pays 10%. What will be the value in your account at the end of Year 30. Answer Selected Answer: [None Given] Correct Answer: $7,427.83 Question 23 0 out of 2.5 points Julian was given a gold coin originaly purchased for $1 by his great grandfather 50 years ago. Today the coin worth $450. The rate of return realized on the sale of this coin is approximately equal to Answer Selected Answer: [None Given] Correct Answer: 13% Question 24 0 out of 2.5 points In 1958 the average tuition for one year at an Ivy League school was $1,800. Thirty years later, in 1988, the average cost was $13,700. What was the growth rate in tuition over the 30-year period? Answer Selected Answer: [None Given] Correct Answer:7% Question 25 0 out of 2.5 points The future value of $100 received today and deposited at 6 percent for four years is Answer Selected Answer: [None Given] Correct Answer: $126 Question 26 0 out of 2.5 points When the amount earned on a deposit has become part of the principal at the end of a specified time period the concept is called [Show More]

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