Q1. The effective rate is:
a. the stated rate
b. the true semiannual rate
c. the annual percentage yield rate
d. the nominal rate
e. the beginning rate
Q2. If you borrow $1000 at an APR of 12% and pay it back in one year making the same
payment amount each month, what principal (P) and interest (I) have you paid when the
load is paid off?
a. P=$1200, I=$120
b. P=$1000, I=$120
c. P=$1000, I=$66.19
d. P=$1200, I=$65.50
e. P=$1000, I=$60.00
Q3. The compound interest on a $3,000.00 loan at 7% for 3 years compounded annually is:
a. $3,675.13
b. $630.00
c. $3,630.00
d. $675.13
e. none of the above
Q4. $15,000.00 for 10 years compounded at 10% quarterly results in how many periods?
a. 20
b. 10
c. 120
d. 40
e. none of the above
Q5. How much should be invested today to provide $1,800.00 in one year? Assume 10%
interest compounded annually.
a. $1,636.36
b. $1,782.00
c. $1,620.00
d. $493.15
e. $1,647.42
Q6. If interest is compounded, the total amount at the end of the loan or investment term is
called the:
a. future value
b. compound amount
c. present value
d. both A and B
e. none of the above
Q7. Your company needs to have $40,465.00 five years from now. If the interest rate at
your bank is 6% compounded quarterly, how much will you need to deposit into your
account today in order to have the desired amount in 5 years?
a. $29,999.26
b. $29,666.92
c. $30,044.05
d. $30,000.00
e. $20,044.05
Q8. Starting with $4,500.00, what will it grow to in 5 years at 7.25% compounded daily.
a. $6,385.95
b. $6,465.89
c. $6,358.59
d. $6,835.59
e. $9,444.50
Q9. Sunfresh Markets made a $13,000.00 investment in a compound interest account
paying 8% compounded monthly. What was the value of its investment at the end of 8
months? (Choose the closest answer)
a. 12710.00
b. 13710.00
c. 13860.00
d. 14710.00
e. 24062.00
Q10. The amount of an ordinary $7,500.00 annuity for 3 years at 12% compounded
quarterly is:
a. $106,440.00
b. $23,182.50
c. $180,997.50
d. $25,305.00
Q11. The sum of the payments of an annuity plus the interest is called the:
a. economic sum
b. payoff amount
c. financial total
d. amount of the annuity
Q12. What is the value of an annuity due at the end of 15 years of quarterly deposits of
$2,000.00 with terms of 8% compounded quarterly?
a. $228,102.00
b. $232,665.14
c. $232,666.08
d. $228,120.00
Q13. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8%
compounded semiannually is:
a. $23,269.60
b. $116,000.00
c. $23,296.60
d. $139,269.60
Q14. An annuity with specific number of payment periods is referred to as a(n):
a. contingent annuity
b. annuity certain
c. annual annuity
d. guaranteed annuity
Q15. A __________ __________ is used to accumulate a required amount of money by the
end of a certain period of time to pay off a financial obligation.
a. sinking fund
b. compound interest
c. present value
d. checking account
e. none of the above
Q16. Payments into a sinking fund are always made when?
a. when the funds are available
b. at the end of each period
c. lump sum at the beginning of the sinking fund
d. at the beginning of each period
e. none of the above
Q17. An annuity without a specific number of payment periods is termed a(n):
a. non-standard annuity
b. annual annuity
c. contingent annuity
d. annuity certain
Q18. The difference between the monthly payments on a $95,000.00 mortgage at 5%
versus 6% for 25 years is:
a. $65.05
b. $56.05
c. $56.50
d. $56.60
Q19. The primary mortgage on a home is called the:
a. collateral
b. real mortgage
c. first mortgage
d. FNMA
Q20. All payments on a mortgage are required to be paid on a __________ basis.
a. semiannually
b. biweekly
c. monthly
d. weekly
e. agreed
Q21. Points represent:
a. monthly payments
b. a 3 percent up front payment
c. an additional cost of financing
d. 2 percent of the amount borrowed
Q22. Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at
the closing. The points amounted to:
a. $750.00
b. $7,500.00
c. $2,500.00
d. $5,000.00
Q23. Brian bought a new ranch style home for $180,000.00. Brian made a 30 percent down
payment. Assuming a rate of 6.5% on a 30 year mortgage, Brian’s monthly payment is:
a. $1,783.80
b. $1,982.00
c. $594.60
d. $796.32
Q24. Jayne purchased a home for $240,000.00 with a down payment of $48,000.00. The
rate of interest was 5-3/4 for 30 years. What was her monthly mortgage payment?
a. $962.70
b. $2,146.85
c. $1,121.28
d. $1,850.46
e. $1000.00
Q25. Land or anything permanently attached to the land is termed:
a. real property
b. FNMA
c. collateral
d. personal property
