MATH 320 Practice Test 4

MATH 320 Practice Test 4 - IT-ISPRACTICEMULTIPLECHOICE TEST...

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Unformatted text preview: IT-ISPRACTICEMULTIPLECHOICE TEST 4'~:~11.,,~rYou are giveninatidt=100.Calculateanj'(A)100nO(B)nO(C;;n-1000(D)100 -nOo(E)n-1002.In FundA, the accumulatedvalueof1 at any timet>0 is 1+t.In Fund B, the accumu-latedvalueof1 at any timet> 0 is 1+ e.Tis the time whentheforceof interestforFundA is equal to the force of interestfor Fund B.CalculateT.(A).41(B)1.00(C)1.41(D)2.00(E) 2.41SueloansBettyanamountL,whichisrepaidby30equalannual.paymentsonanamortizationbasisatratej.Sueremitseachpaymenttoafundearning6%.Theaccumulatedvalueofthefundimmediatelyfollowingthefinaldepositisk.FindanexpressionforL,given that$301i=m.(E)NoneofA,B,C,D3.(A)79.058(1+jm)km(B)79.058(1+j)km(D)_kmI.1\i"i4.A loan,for amountA,is to be amortizedbynannualpaymentsof1, basedon an interestrateofi.Pis the presentvalue,at interestratei, of the principalportionsoftheloanpayments.Determineanexpressionfor(Ia)nj .Aninsurancecompanyownsa1000 parvalue10% bond withsemiannualcoupons.Thebondwill maturefor 1000 at the end of 10 years.The company decidesthat an 8-year bondwouldbe preferable.Currentyield ratesare 7% compoundedsemiannually.The companyusestheproceedsfrom the sale of the10% bondto purchasea 6% bondwithsemiannualcoupons,maturingat par at the end of 8 years.Calculatethe par value of the 8-year bond.(E)14971(C)-,-(A-P)'1.(D)14191(E)(t(A-P)(C)1306~'1291v2(A)~(A-P)'1.(A)10005.IT-166.In Fund X moneya::"..:....-::~:a:es2,::~or:eof interestOt=.01t+.10, for 0$t$20. In FundY money ac::..::;::'..::a:esa: ~-.:-._.?:e:re:tiverate i. An amountof 1 is investedin each of FundX andFund Y :-::-:::e2:S-=-:-.e';alue of Fund X at the end of 20 yearsis equalto the valueof Fund Y at r::e e:-:: ::':::.e2:3. Calculatethe valueof Fund Y at the end of 1.5 years.(A)elG(E)e,507.The preser.: \'a:-..:e0:' a ?2.Y::1entof 1004 at the endofTmonthsis equalto the presentvalueof 314 afterl::-.or.::.,:-lafter18 months,and 419after24 months.Theeffectiveannualinterestra:e is 5J.Cal=ulateT.CA)14CB)15(C)16(D)17(E)188.A perpetui:ypays1 at the end of the first year,2 at the end of the secondyear,3 at the endof the third year,and so on.Which of the followingexpressionsgivethe presentvalueofthis perpetuity?CA)I&ITCB)I&ill(C)IT&ill"iP)ITonly(E)Noneof A, B, C,D11.A 30-year10,000 bondthat pays 3% annualcouponsmaturesat par. It is purchasedto yield5%forthefirst15 yearsand4%thereafter.Calculatetheamountforaccumulationofdiscountfor year 8.1O.You are givenOt=1it.A paymentof 300 at the end oDyearsand 600 at the end of 6years has the same presentvalue as a paymentof 200 at the end of 2 yearsandXat the endof 5 years.CalculateX.The proceedsof a life insuraJepolicyare left on deposit,with interestcreditedat the endof each year.The beneficiarymakes withdrawalsfromthe fundat theendof each yeart,t=1,2,.. , ,10. Atthe minimuminterestrateof3%guaranteedin thepolicy,theequalannualwithdrawalwouldbe1000. Howevertheinsurercreditsinterestat 4%for the firstfouryearsand5%for the nextsix years.Theactualamountwithdrawn.at the end of theyeartisWt=;;~,whereFt...
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MATH 320 Practice Test 4 - IT-ISPRACTICEMULTIPLECHOICE TEST...

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