# oldex2 - Name UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN...

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Name: ______________________________________ UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN Actuarial Science Program DEPARTMENT OF MATHEMATICS Math 210 P r o f . R i c k G o r v e t t Theory of Interest Fall, 2007 Exam # 2 (17 Problems – Max possible points = 40) Thursday, November 1, 2007 You have 80 minutes (from 10:30 to 11:50 am) to complete this exam. The exam is closed- book, closed-note, except that you may refer to your two-sided 3x5-inch notecard. Problems (1) through (14) are multiple choice, each worth two points. Circle the letter associated with the best answer to each question. Problems (15) through (17) are each worth four points. Please provide dollar answers to the nearest cent (\$x,xxx.xx), and proportion and probability answers either as percentages to two decimal places (xx.xx%) or as numbers to four decimal places (0.xxxx). Good luck! (1) The nominal annual interest rate convertible quarterly is 16%. Which of the following is closest to the present value, now, of a payment of 1,000 scheduled to be made 14 months from now? (a) 831 (b) 833 (c) 841 (d) 843 (e) 851 1

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(2) On June 30 and on December 31 of each of calendar years 2008, 2009, 2010, 2011, and 2012, you expect to receive a payment of 5,000. The effective annual interest rate is 10%. Find the present value, P , of this stream of payments as of March 31, 2007. (a) P 36,100 (b) 36,100 < P 36,200 (c) 36,200 < P 36,300 (d) 36,300 < P 36,400 (e) 36,400 < P (3) An annuity will pay you at the rate of X per annum, continuously, for the next 20 years. The effective annual interest rate is 8.5%. Find the value of X that would produce a present value of 22,000. (a)
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oldex2 - Name UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN...

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