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**Unformatted text preview: **Chapter 9 The Basic Tools of Finance 1. The field of finance studies how a. society manages its scarce resources. b. people make decisions regarding resource allocation over time and how to handle risk c. people decide whether or not to become risk averse. d. society can reduce aggregate risk. ANSWER: b. how people make decisions regarding resource allocation over time and how to handle risk TYPE: M DIFFICULTY: 1 SECTION: 9.0 2. If you put $300 in an account paying 2 percent interest, what is the future value of this account in two years? a. $310 b. $312 c. $312.12 d. $314.24 ANSWER: c. $312.12 TYPE: M DIFFICULTY: 1 SECTION: 9.1 3. What is the future value of $500 one year from today if the interest rate is 6 percent? a. $503 b. $515 c. $530 d. None of the above are correct. ANSWER: c. $530 TYPE: M DIFFICULTY: 1 SECTION: 9.1 4. What is the future value of $750 one year from today if the interest rate is 3 percent? a. 772.73 b. 772.50 c. 773.33 d. None of the above are correct to the nearest penny. ANSWER: b. 772.50 TYPE: M DIFFICULTY: 1 SECTION: 9.1 5. What is the future value of $800 one year from today if the interest rate is 7 percent? a. $747.66 b. $756.00 c. $856.00 d. None of the above are correct to the nearest penny. ANSWER: c. $856.00 TYPE: M DIFFICULTY: 1 SECTION: 9.1 6. What is the future value of $333 at an interest rate of 3 percent one year from today? a. $337.39 b. $342.99 c. $343.09 d. None of the above are correct to the nearest penny. ANSWER: b. $342.99 TYPE: M DIFFICULTY: 1 SECTION: 9.1 225 226 Chapter 9/The Basic Tools of Finance 7. What is the future value of $450 at an interest rate of 11 percent one year from today? a. $495.00 b. $495.40 c. $494.50 d. $499.50 ANSWER: d. $499.50 TYPE: M DIFFICULTY: 1 SECTION: 9.1 8. Two years ago Rudolph put $3,000 in an account paying 3 percent interest. How much does he have in the account today? a. $3,180.00 b. $3,182.70 c. $3,183.62 d. None of the above are correct to the nearest penny. ANSWER: b. $3,182.70 TYPE: M DIFFICULTY: 1 SECTION: 9.1 9. Three years ago Warren put $1,200 in an account paying 2 percent interest. How much is the account worth today? a. $1,225.38 b. $1,248.48 c. $1,264.72 d. $1,273.45 ANSWER: d. $1,273.45 TYPE: M DIFFICULTY: 1 SECTION: 9.1 10. Lisa deposits $250 in an account and one year later has $270; what was the interest rate? a. 8 percent b. 9 percent c. 10 percent d. None of the above are correct. ...

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