act240 test1 with solutions

act240 test1 with solutions - Family name, comma, personal...

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ACT240 F09 TT1 v06 Privacy Code A post test for web Page 1 of 10 Family name, comma, personal names:____________________________________ Your student ID:______________________________________________________ Your signature: ______________________________________________________ UNIVERSITY OF TORONTO Faculty of Arts and Science ACT240 Fall 2009 TERM TEST 1, OCT 5, 2009 Duration – 50 Minutes Aids: All calculators allowed. Scrap paper OK if needed. Instructor: Keith Sharp PhD FSA FCIA CFA NOTES: 1. Please identify your Privacy Code in the page footer (small letters at bottom of this page, A, B, C or D) and blob it as the answer for the question after the last real question (so blob as question 11 for a 10-question term test, as question 25 for a 24 question final). 2. It’s OK to write on book. 3. This is a closed book exam. 4. Multiple choice: only your letter answer mark sense sheet will be graded. 5. Mark sense sheets: please write in both the blobs and eye-readable identifiers 6. Mark sense sheets: pencil preferred, ink might have to be hand-graded 7. Each question: 10 points correct, two if blank, zero points if wrong 8. So expectation if you guess is the same as leaving a blank. 9. Make sure you’ve indicated your letter answers on the mark sense sheet before time’s up 10. Please stay in your seats and don’t talk till all materials have been collected. 11. Photo ID on desk during exam 12. Name and student ID and signature on this question paper and on mark sense sheet 13. Good luck!
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ACT240 F09 TT1 v06 Privacy Code A post test for web Page 2 of 10 1. (Assignment Sept 18, 2009) Mike receives cash flows of 100 today, 200 in one year, and 100 in two years. The present value of these cash flows is 383.48 at an annual effective rate of interest i . Calculate i . (A) Less than 0.03000 (B) 0.03000 but less than 0.03500 (C) 0.03500 but less than 0.04000 (D) 0.04000 but less than 0.04500 (E) 0.04500 or more (D) Solution: 383.48=100 + 200v + 100v 2 100v 2 + 200v – 283.48=0 v = {-200 +- sqrt(40000+4*100*283.48)}/(2*100) = 0.95826 (choosing positive root) i=(1/v -1)=0.043553
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ACT240 F09 TT1 v06 Privacy Code A post test for web Page 3 of 10 2. Carl puts $10,000 into a bank account that pays an effective rate of 6% for ten years, with interest credited at the end of each year. If a withdrawal is made during the first five and one-half years, a penalty of 5% of the total withdrawal is made. Carl withdraws enough to put K in his pocket (after paying any penalty) at the end of each of years 4, 5, 6 and 7. The balance in the
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This note was uploaded on 12/21/2010 for the course ACT act240 taught by Professor Act during the Fall '07 term at University of Toronto.

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act240 test1 with solutions - Family name, comma, personal...

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