Quiz 3
Question 1
4 out of 4 points
How much would Roderick have after 6 years if he has $500 now and leaves it invested at 5.5% with annual compounding?
Answer
Selected Answer: $689.42
Correct Answer: $689.42
Question 2
0 out of 4 points
A $250,000 loan is to be amortized over 8 years, with annual end-of-year payments. Which of these statements is CORRECT?
Answer
Selected Answer: If the loan were amortized over 10 years rather than 8 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 8-year amortization plan.
Correct Answer: The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.
Question 3
4 out of 4 points
Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?
Answer
Selected Answer: A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
Correct Answer: A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
Question 4
4 out of 4 points
Which of the following statements is CORRECT?
Answer
Selected Answer: The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
Correct Answer: The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
Question 5
4 out of 4 points
A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
Answer
4 out of 4 points
How much would Roderick have after 6 years if he has $500 now and leaves it invested at 5.5% with annual compounding?
Answer
Selected Answer: $689.42
Correct Answer: $689.42
Question 2
0 out of 4 points
A $250,000 loan is to be amortized over 8 years, with annual end-of-year payments. Which of these statements is CORRECT?
Answer
Selected Answer: If the loan were amortized over 10 years rather than 8 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 8-year amortization plan.
Correct Answer: The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.
Question 3
4 out of 4 points
Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 8% is CORRECT?
Answer
Selected Answer: A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
Correct Answer: A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment.
Question 4
4 out of 4 points
Which of the following statements is CORRECT?
Answer
Selected Answer: The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
Correct Answer: The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
Question 5
4 out of 4 points
A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
Answer