1. Interest rates are quoted by stating the ____ followed by the compounding period.
A. nominal rate
B. yield
C. coupon rate
D. effective annual rate
E. None of these choices are correct.
2. If a series of equal payments is paid regularly out of a bank account which earns a constant rate of interest, the ____ is the amount that must be in the bank at the beginning of the series to just fund all of the payments.
A. future value of an ordinary annuity
B. present value of an ordinary annuity
C. future value of an annuity due
D. present value of an annuity due
E. None of these choices are correct.
3. If you invest the $10,000 you receive at graduation (age 22) in a mutual fund which averages a 12% annual return, how much will you have at retirement in 40 years?
A. $909,090
B. $783,879
C. $930,510
D. $510,285
4. You purchased a piece of property for $30,000 nine years ago and sold it today for $83,190. What was the annual rate of return on your investment?
A. 12%
B. 9%
C. 10%
D. 11%