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Mixed Quiz
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1
Which of the following is the common-size measure of an investment's performance?
A)return on investment
B)risk premium ratio
C)return of capital
D)rate of return
2
Brian Mosel invested $5,000 on July 1, 2009, and in return he received a total of $5,600, which he collected on July 1, 2010. The rate of return on Brian's investment was:
A)8.9%
B)11.2%
C)6.0%
D)12.0%
3
Calculating the expected rate of return uses all the following except:
A)Probabilities of future returns
B)Possible amounts of return
C)Initial investment
D)Cost of capital
4
Kipi Partners wants to purchase an oil field for exploration. An investment of $2,750,000 would be made for one year with the following potential outcomes:

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The expected rate of return for this investment is:
A)25.5%
B)15.5%
C)26.0%
D)2.45%
5
How does changing the compounding from annual to quarterly impact total returns?
A)Increases total return as interest is earned on previously earned interest
B)Decreases total return as interest is earned on previously earned interest
C)The more you compound, the higher the annual interest rate and so returns grow faster
D)Compounding does not impact total returns
6
The future value of a $12,000 investment at the end of 8 years with an interest rate of 5% compounded semi-annually is (using tables, round to dollars):
A)$8,083
B)$17,730
C)$17,814
D)$23,170
7
Bert will be setting aside $2,000 at the end of this year and not touching it for five years. He would like to know what amount it will grow to if he earns a 7% annual interest rate on this savings. What amount is Bert seeking?
A)Future Value of the Amount of $1
B)Present Value of the Amount of $1
C)Future Value of an Annuity
D)Present Value of an Annuity
8
Amy is going to quit her job and go back to school. What amount should she put into a savings account today so that it will grow to enough for graduate school tuition in six years which she estimates to be $14,800, assuming 6% compounded semi-annually (using tables, round to dollars)?
A)$10,381
B)$10,434
C)$20,994
D)$21,102
9
Your employer has agreed to pay you $210,000 on your retirement date which you expect to be ten years from today. If your employer wants to set aside enough today to fund this promise and expects to earn 5% compounded annually, how much should they set aside (using tables, round to dollars)?
A)$119,146
B)$342,069
C)$128,163
D)$128,919
10
The present value of a future amount will do which of the following if the interest rate is increased.
A)The present value will increase
B)The present value will decrease
C)The present value will not change
D)Must know the amount of the future value before this can be answered
11
You are going to invest $40,000 today and want to have $87,000 in 10 years. If the interest rate is compounded annually what is the annual interest rate necessary to achieve this goal (using tables)?
A)Just over 8%
B)Just under 9%
C)Just under 8%
D)Just over 6%
12
You make quarterly deposits of $400 for seven years into a savings account. The annual interest rate is 8%. What amount will have accumulated after the last payment is made (using tables, round to dollars)?
A)$11,200
B)$14,820
C)$3,569
D)$8,513
13
The present value of 12 semi-annual payments of $7,500 each assuming a 18% annual interest rate is:
A)$143,144
B)$90,000
C)$53,705
D)$31,995
14
Lee Vu wishes to make 8 semiannual withdrawals of $3,000 each beginning on July 1, 2010. Assuming a 6% annual interest rate, what amount must Lee deposit on January 1, 2010 to achieve this goal (using tables, round to dollars)?
A)$21,059
B)$24,000
C)$22,955
D)$20,198
15
Wang Ki just sold his website company and wishes to live off his boat for the next 24 months using the money he just received for his business. If his proceeds from selling were $300,000, how much can he spend each month and not run out of money until the end of the 24th month of boating, assuming a 12% annual interest rate (using tables, round to dollars)?
A)$6,373
B)$14,122
C)$12,500
D)$11,122





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