{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}


1297354874833_Eco412_quiz2_fall10 - Quiz 2 ECO412 Name...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Quiz 2: ECO412, September 23, 2010 Name ____________________________ Multiple Choice Questions: 1 point each. Read each question carefully. Always select the best answer, especially if more than one appears to be correct. _____1. The future value of a payment is related to the present value by a. PV = (1+i) n / FV n . b. FV n = PV / (1+i). c. PV = FV n + PV(1+i) n . * d. FV n = PV * (1+i) n . e. both b and d. _____2. A coupon bond with a face value of $10,000 is for sale that promises 3 annual coupon payments of $1,000 each. If the interest rate is 7%, what is the most you would be willing to pay today for the bond? a. $13,000.00 b. $12,149.53 * c. $10,787.29 d. $15,690.37 _____3. Suppose that $1,000 is placed in an interest-bearing account and will be left there for 5 years. The interest rate equals i. How much money will be in the account at the end of this time period? a. $1000 + 5i b. $1000(1+5i) * c. $1000(1+i) 5 d. $1000 / (1+i) 5 _____4. If the annual interest rate is 6%, the corresponding monthly interest rate is: a. 0.50%. * b. 0.487%. c. 0.72%. d. 0.072%. _____5. When the interest rate falls, holders of bonds will experience a(n): * a. increase in the value of the bonds that they are already holding.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}