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w2 review questions

w2 review questions - Unit 2 Week Two Week 2 Review...

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http://parkonline.org/ec/exm2/StudentLoadSection.learn?47=2984647... 8/25/2008 7:23 PM Unit 2: Week Two - Week 2 Review Questions Help Save Answers Submit For Grade 1. You have the choice between two investments that have the same maturity and the same nominal return. Investment A pays simple interest, investment B pays compounded interest. Which one should you pick? (Points: 1) n m l k j A--because it has a higher effective annual return. n m l k j A and B offer the same return, thus they are equally as good. n m l k j i B--because it has higher effective annual return. n m l k j Not enough information. 2. Last national bank offers a CD paying 7% interest (compounded annually). If you invest $1,000 how much will you have at the end of year 5. (Points: 1) n m l k j $712.99 n m l k j i $1,402.55 n m l k j $1,350.00 n m l k j $1,000 3. You want to buy a house in 4 years and expect to need $25,000 for a down payment. If you have $15,000 to invest, how much interest do you have to earn (compounded annually) to reach your goal? (Points: 1) n m l k j 16.67% n m l k j i 13.62% n m l k j 25.74% n m l k j 21.53% 4. You want to buy your dream car, but you are $5,000 short. If you could invest your entire savings of $2,350 at an
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