Quiz Questions


1	A credit union pays a rate of 5% pa simple interest on deposits with maturities in the 61 to 90 day range. However, early redemption will result in a rate of 3% pa simple interest being applied. How much more interest will a 61-day $50,000 term deposit earn if it is held until maturity, than if it is redeemed after 50 days?
		A)	$280.82
		B)	$91.78
		C)	$292.14
		D)	$212.33
		E)	$30.14


2	An investment promises two payments of $800, three months and six months from today. If the required return on investment is 10% pa simple interest, what is the fair market value of the investment today?
		A)	$1620.00
		B)	$1523.81
		C)	$1542.39
		D)	$1440.00
		E)	$1560.98


3	An investor requires a minimum return of 8.5% pa. What is the maximum price she should pay today for the right to receive payments of $5000 in six months and $8000 in nine months.?
		A)	$13,722.50
		B)	$11,863.67
		C)	$12,316.73
		D)	$12,374.21
		E)	$12,983.33


4	An investment earning 18% pa simple interest has a maturity value of $2800 after 16 months. What was the initial amount invested?
		A)	$2800.00
		B)	$3472.00
		C)	$2258.06
		D)	$3500.00
		E)	$2240.00


5	An investment promises a payment of $12,000 one year from today. What is the fair market value of the investment today if the required return on investment is 11% pa?
		A)	$13,440.00
		B)	$10,714.29
		C)	$10,810.81
		D)	$10,000.00
		E)	$24,000.00


6	A $500,000, 91-day T-bill was issued 35 days ago. At what price will it sell today in order to yield the purchaser 7.25%?
		A)	$494,438.36
		B)	$494,499.54
		C)	$496,547.97
		D)	$496,523.97
		E)	$495,993.67


7	Susan obtained a $5000 demand loan on June 1 at prime plus 2%. The prime rate was 10% on June 1 and decreased to 9% on July 15. Susan paid $1500 towards principal plus the accrued interest on June 20. She completely repaid the debt and accrued interest on August 10. What was the total interest charge?
		A)	$87.92
		B)	$86.18
		C)	$85.21
		D)	$87.65
		E)	$86.32


8	Susan set up a $10,000 line of credit with the Bank of Nova Scotia. She took out $5000 on March 10, $1100 on March 25, and $2000 on April 20. Interest at prime plus 2% was calculated up to and including the statement date on the 23rd of each month. Accrued interest was debited to her chequing account on the statement date. In addition, Susan paid $400 on April 4. The prime rate was 8.25% on March 10 but rose to 8.5% effective April 2. What interest charges will show on her March 23rd statement?
		A)	$0.00
		B)	$18.26
		C)	$19.66
		D)	$21.06
		E)	$73.48


9	Referring to the previous question, what balance will show on her March 23rd statement?
		A)	$5000.00
		B)	$5018.26
		C)	$5073.48
		D)	$5021.06
		E)	$5019.66


10	Referring to the previous question, what interest charges will show on her April 23rd statement?
		A)	$53.71
		B)	$15.10
		C)	$0.00
		D)	$26.33
		E)	$73.48

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