ADMS3530-Midterm-W09 - Name Section ID # Professor...

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1 Name Section ID # Professor Alagurajah’s Section T (Mondays, 2.30-5.30 pm), Professor Lim’s Section N (Tuesdays, 7-10 pm), Professor King’s Section P (Internet), Professor Li’s Section M (Thursdays, 2:30-5:30 pm), Professor Tahani’s Section Q (Mondays, 7-10 pm), and Professor Yildirim’s Section R (Wednesdays, 4-7 pm) and Section S (Fridays, 2.30-5.30) . AK/ADMS 3530.03 Finance Midterm Exam Winter 2009 April 19, 2009 Type A Exam This exam consists of 30 multiple choice questions and carries a total of 100 points . Choose the response which best answers each question. Circle your answer below , and fill in your answers on the bubble sheet . Only the bubble sheet is used to determine your exam score . Please do not forget to write your name and ID # both at the top of this cover page and on the bubble sheet. Also please write the type of your exam (A or B) on the bubble sheet. Please note the following points : 1) Read the questions carefully and use your time efficiently . 2) Choose the answers that are closest to yours, because of possible rounding. 3) Keep at least 4 decimal places in your calculations and final answers, and at least 6 decimal places for the interest rate 4) The 20 “Numerical questions” are worth 4 points each. 5) The 10 “Conceptual questions” are worth 2 points each. 6) Unless otherwise stated, interest rates are annual , and bonds pay semiannual coupons and have a face value (or par value) of $1,000 . 7) You may use the back of the exam paper as your scrap paper.
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Numerical questions (4 points each) 1. A home mortgage of $400,000 is to be repaid monthly at a 4.6% APR semi-annually compounded over 25 years. How much interest is paid over the life of the mortgage loan? A) $270,846 B) $273,800 C) $281,350 D) $460,000 E) $831,267 2. How long will it take to accumulate $1 million with annual payments of $10,000 with the first payment made today if the interest rate is 4% APR? A) 40 years B) 41 years C) 50 years D) 100 years E) A perpetuity 3. Home theatres are on sale with the following payment options: either pay cash and receive a 5% discount, or pay monthly for 12 months with no money down. To calculate the monthly payment, add a 10% administrative fee to the purchase price, and divide the total amount into 12 equal monthly payments (made at the end of each month). What effective annual rate of interest is being charged? A) 18% B) 20% C) 28% D) 32% E) We can’t answer if we don’t know the purchase price 4. An amount of $250,000 is used to create an inflation-protected annuity. This annuity makes 30 annual payments that increase at 2% each year with the first payment made at the end of this year. What is the amount of the first payment if the interest rate is 5% annually compounded? A) $8,333
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This note was uploaded on 04/11/2011 for the course ADMS 3530 taught by Professor Unknown during the Spring '09 term at York University.

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ADMS3530-Midterm-W09 - Name Section ID # Professor...

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