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QUESTION 1 You’re scheduled to receive $4,500 at the end of each quarter, over the next 3 years. If the annual interest rate is 10%, with quarterly compounding, what is the present value of this strea
QUESTION 1
You’re scheduled to receive $4,500 at the end of each quarter, over the next 3 years. If the annual interest rate is 10%, with quarterly compounding, what is the present value of this stream of cash flows? (Nearest dollar)
- $47,314
- $30,662
- $46,160
- $96,229
- $68,132
QUESTION 2
Julie has $2,000 in her bank right now. In addition, she will be making 4 more deposits of $1,000 at the end of each of the next 4 years. If the bank pays 6% per year, compounded annually, how much will Julie have in her account at the end of 4 years? (To the nearest dollar)
- $10,012
- $ 6,586
- $ 6,375
- $ 6,900
- $ 4,375
QUESTION 3
A bank paid a stated annual interest rate of 12%, with monthly compounding. What was the equivalent (or "effective") annual rate?
- 12.36%
- 12.75%
- 12.68%
- 14.40%
- 6.25%
QUESTION 4
In the "loanable funds" framework, which of the following would be associated with a higher interest rate?
- a smaller quantity of funds supplied, on a given supply curve
- a decrease in the expected rate of inflation
- a rightward shift, or increase, in the supply of funds
- a leftward shift, or decrease, in the supply of funds
- a larger quantity of funds demanded, on a given demand curve
QUESTION 5
A security has a nominal interest rate of 9%. If we know that market participants are expecting inflation of 2% per year, what's the real interest rate? ( assuming no other additional factors like liquidity risk, default risk, etc.)
- 7%
- 2%
- 5.5%
- 9%
- 11%
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