29 Jun uestion Question 1
uestion
Question 1
A local brokerage firm is offering a zero coupon certificate of deposit for $10,000. At maturity, three years from now, the investor will receive $14,000. What is the rate of return on this investment?
Answer
14 percent
13 percent
12 percent
11 percent
Question 2
Zheng Sen wishes to accumulate $1 million by the end of 20 years by making equal annual end-of-year deposits over the next 20 years. If Zheng Sen can earn 10 percent on his investments, how much must he deposit at the end of each year?
Answer
$ 14,900
$ 50,000
$117,453
$17,460
Question 3
Colin would like to send her parents on a cruise for their 25th wedding anniversary. She has priced the cruise at $15,000 and she has 5 years to accumulate this money. How much must Janice deposit annually in an account paying 10 percent interest in order to have enough money to send her parents on the cruise?
Answer
$1,862
$2,457
$3,000
$2,234
Question 4
The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is
Answer
$380.
$158.
$253.
$252.
Question 5
If the required return is less than the coupon rate, a bond will sell at
Answer
par.
a discount.
a premium.
book value.
Question 6
Bill plans to fund his individual retirement account (IRA) with the maximum contribution of $2,000 at the end of each year for the next 20 years. If Bill can earn 12 percent on his contributions, how much will he have at the end of the twentieth year?
Answer
$19,292
$14,938
$40,000
$144,104
Question 7
The rate of return earned on an investment of $50,000 today that guarantees an annuity of $10,489 for six years is approximately
Answer
5%.
7%.
30%.
None of these.
Question 8
The present value of a $25,000 perpetuity at a 14 percent discount rate is
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