Exam 2 SAMPLE QUESTIONS

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Unformatted text preview: the bond worth today? a. $9,090.91 b. $10,000.00 c. $8,264.46 d. $9,523.81 ____ 7. Mixster Concrete Company is considering buying a new cement truck. The owners and their accountants decide that this is the profitable thing to do. Before they can buy the truck, the interest rate and price of trucks change. In which case do these changes both make them less likely to buy the truck? a. Interest rates rise and truck prices rise. b. Interest rates fall and truck prices rise. c. Interest rates rise and truck prices fall. d. Interest rates fall and truck prices fall. ____ 8. Using the rule of 70, about how much would $100 be worth after 50 years if the interest rate were 7 percent? a. $400 b. $800 c. $1,600 d. $3,200 ____ 9. If you put $1,000 in the bank today at an interest rate of 6% what is its value in two years? a. $2,000(1.06) b. $1,000 + $(1.06)2 c. $1,000(1.06)2 d. None of the above are correct. ____ 10. What is the present value of a payment of $1,000 two years from now if the interest rate is 6%? a. $2,000/1.06 b. $1000/(1.06)2 c. $1000/(1 + 0.062) d. None of the above are correct. ____ 11. Albert Einstein once referred to compounding as a. “an obsession among economists that defies explanation.” b. “the greatest mathematical discovery of all time.” c. his own discovery. d. John Maynard Keynes’s greatest contribution. 2 Name: ________________________ ID: A Figure 27‐2. On the graph, x represents risk and y represents return. ____ 12. Refer to Figure 27‐2. Point A represents a situation in which a. all of a person’s...
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This note was uploaded on 06/12/2013 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue University-West Lafayette.

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