Review Questions (WK2)

# Review Questions (WK2) - WEEK 2 REVIEW QUESTIONS 1. You...

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WEEK 2 REVIEW QUESTIONS 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) A--because it has a higher effective annual return. A and B offer the same return, thus they are equally as good. B--because it has higher effective annual return. 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) \$712.99 \$1,402.55 \$1,350.00 \$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) 16.67% 13.62% 25.74% 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 annual interest of 12%, how long would you have to wait until you have accumulated enough money to buy the car? (Points: 1) 9.40 years 3.48 years 7.24 years 6.66 years

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## This note was uploaded on 08/23/2011 for the course CS 300 taught by Professor Matthewhoward during the Fall '09 term at Park.

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Review Questions (WK2) - WEEK 2 REVIEW QUESTIONS 1. You...

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