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FINC 331 Week 3 Homework
Correct 94%
You have $300,000 that you want to invest in a one year Certificate of Deposit (CD) with a 4% annual interest rate. What will be the value of that CD in a year?
Question 1 options:
$315,000wrong
$312,000
$420,000
$301,200
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Question 2 (1 point)
Which of the following is the correct formula for calculating future value with simple interest?
Question 2 options:
FV = PV * (1+i*t)
FV = PV * (1+i)t
FV = PV * i
All of these answers
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Question 3 (1 point)
You plan to invest $100,000 in a 3 year Certificate of Deposit that has a 5% compound interest rate. What is its future value?
Question 3 options:
$115,000
$115,763
$115,927
$105,000
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Question 4 (1 point)
You plan to invest $100,000 in a 3 year Certificate of Deposit that has a simple interest rate of 5%. What is its future value?
Question 4 options:
$115,000
$115,763
$115,927
$105,000
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Question 5 (1 point)
What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% compound interest rate every year (rounded up to the nearest dollar)?
Question 5 options:
130000
134785
More than $134785
30000
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Question 6 (1 point)
What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% simple interest rate every year (rounded up to the nearest dollar)?
Question 6 options:
30,000
130,000
134,785
More than $134,785
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Question 7 (1 point)
An annuity pays $1500 at the beginning of every month for five years. The interest rate of the annuity is 4%. What is this annuity's future value?
Question 7 options:
$97,948
$101,280
$99,780
$99,448
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Question 8 (1 point)
A five year annuity pays $1000 at the end of every month for four years. It has an interest rate of 3%. What is its present value?
Question 8 options:
$26,024
$3,717
$3,828
$25,266
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Question 9 (1 point)
You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity's approximate IRR?
Question 9 options:
2.3%
4.5%
8.6%
10%
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Question 10 (1 point)
Which of the following correctly defines a method of determining a single period investment's yield?
Question 10 options:
Annual Percentage Rate = (1+(i/N))^N - 1.
The Effective Annual rate is the interest rate multiplied by the number of payment periods per year.
Change-in-value equals the investment's FV minus its PV. Divide that by PV and multiply by 100%.
All of these answers.
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Question 11 (1 point)
You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio?
Question 11 options:
$808.12
$6613.60
$6808.12
$613.60
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Question 12 (1 point)
You purchase two annuities. The first is for three years and pays $1500 annually. The second is for four years and pays $2000 annually. The interest rate for both is 4%. What is the Future Value of this portfolio?
Question 12 options:
$12,612.90
$485.11
$506.74
$13,175.33
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Question 13 (1 point)
Which of the following is a cost to the investor that is included in the calculation of an investment's interest rate?
Question 13 options:
All of these answers.
Inflation
Risk of a bad investment.
Opportunity Cost.
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Question 14 (1 point)
In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?
Question 14 options:
$952,381
$1,050,000
$995,025
$666,667
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Question 15 (1 point)
Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond's present value?
Question 15 options:
$240,385
$205,482
$205,676
$238,095
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