Banking Finance: Questions
Question 1
(5 points) Carlos goes to the bank to take out a personal loan. The stated annual interest rate is 10%, but interest is compounded quarterly and he will make monthly payments. What is the EAR?
Your Answer
Score
Explanation
2.50%
8.94%
10.00%
10.38%
Correct
5.00
Correct.
Total
5.00 / 5.00
Question Explanation
Interest rate conversion.
Question 2
(5 points) Gloria is 37 and trying to plan for retirement. She has put a budget together and plans to save $4,100 per year, starting at the end of this year, in a retirement fund until she is 56. Assume that she can make 7.0% on her account. How much will she have for retirement at age 56?
Your Answer
Score
Explanation
$77,900.00
$153,253.76
Correct
5.00
Correct.
$168,081.52
$101,394.22
Total
5.00 / 5.00
Question Explanation
Basic FV calculation.
Question 3
(5 points) Dominique has just turned 58 and she has deposited her annual payment of $20,000 into her retirement account. She made her first such saving deposit into this fund on her 34th birthday. Dominique has also retired and wants to figure out how much money she has in her retirement account for her retired life. You are Dominique's friend who knows finance. How much is Dominique's savings worth today given that the fund has earned an annual return of 3.5%? (Enter just the number in dollars without the $ sign or a comma and round off decimals.)
Answer for Question 3
You entered:
Your Answer
Score
Explanation
778997
Correct
5.00
Correct.
Total
5.00 / 5.00
Question Explanation
FV value of an annuity calculation.
Question 4
(5 points) Gerard has estimated that he is going to need enough in his retirement fund to withdraw $80,000 per year beginning on his 66th birthday and for 19 additional years thereafter. How much will Gerard need in his retirement account at age 65 if his fund is expected to earn an annual return of 6.5%?
Your Answer
Score
Explanation
$858,776.82
$861,515.89
$1,600,000.00
$881,480.58
Correct
5.00
(5 points) Carlos goes to the bank to take out a personal loan. The stated annual interest rate is 10%, but interest is compounded quarterly and he will make monthly payments. What is the EAR?
Your Answer
Score
Explanation
2.50%
8.94%
10.00%
10.38%
Correct
5.00
Correct.
Total
5.00 / 5.00
Question Explanation
Interest rate conversion.
Question 2
(5 points) Gloria is 37 and trying to plan for retirement. She has put a budget together and plans to save $4,100 per year, starting at the end of this year, in a retirement fund until she is 56. Assume that she can make 7.0% on her account. How much will she have for retirement at age 56?
Your Answer
Score
Explanation
$77,900.00
$153,253.76
Correct
5.00
Correct.
$168,081.52
$101,394.22
Total
5.00 / 5.00
Question Explanation
Basic FV calculation.
Question 3
(5 points) Dominique has just turned 58 and she has deposited her annual payment of $20,000 into her retirement account. She made her first such saving deposit into this fund on her 34th birthday. Dominique has also retired and wants to figure out how much money she has in her retirement account for her retired life. You are Dominique's friend who knows finance. How much is Dominique's savings worth today given that the fund has earned an annual return of 3.5%? (Enter just the number in dollars without the $ sign or a comma and round off decimals.)
Answer for Question 3
You entered:
Your Answer
Score
Explanation
778997
Correct
5.00
Correct.
Total
5.00 / 5.00
Question Explanation
FV value of an annuity calculation.
Question 4
(5 points) Gerard has estimated that he is going to need enough in his retirement fund to withdraw $80,000 per year beginning on his 66th birthday and for 19 additional years thereafter. How much will Gerard need in his retirement account at age 65 if his fund is expected to earn an annual return of 6.5%?
Your Answer
Score
Explanation
$858,776.82
$861,515.89
$1,600,000.00
$881,480.58
Correct
5.00