# FIN Unit 2 QUIZ

If you put \$8,000 in a savings account today, how much will it grow to in 3 years if the bank pays 6% annual interest compounded continuously?

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\$8,494.69

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\$9,440.00

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\$9,528.12

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\$9,577.74

A company issues zero coupon bonds which mature in 30 years. These bonds can be bought for \$99.38 and then pay no annual interest payments, only \$1000 at maturity. What is the annual percentage cost of these bonds to the issuing company?

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30%

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17%

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12%

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8%

If you can invest \$10,000 at a 7% annual rate, compounded monthly, how long will it take to have \$13,050?

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19 months

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52 months

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16 months

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46 months

Which of the following statements is not true ?

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The present value factor is also known as the discount factor.

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The present value factor decreases as the interest rate increases.

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The present value factor is the reciprocal of the future value factor.

[removed]The present value factor can be greater than 1.  Aaron earns 10% interest compounded annually on his savings. He will deposit \$750 today, \$825 one year from today, and \$910 two years from today. What will be the account balance three years from today?

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\$3006.50

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\$2,486.00

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\$2,642.50

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\$2,997.50

The amount borrowed on a loan equals the

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compounded value of the loan payments

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sum of the loan payments

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discounted value of the loan payments

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future value of the loan payments

Which of the following examples represents a growing annuity?

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A 30-year mortgage.

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A share of preferred stock.

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A consol.

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The EAR will equal the APR if interest is compounded

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daily.

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monthly.

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quarterly.

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annually.

Which of the following is not a typical way in which interest rates are quoted in the marketplace?

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APR.

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EAR.

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Discounted interest.

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The quoted interest rate.

Which of the following interest rates will result in the highest amount of interest being charged?

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7% per year, compounded daily.

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7.5% per year, compounded quarterly.

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8% per year, compounded annually.

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7.8% per year, compounded daily.