How long will it take a sum to double if you earn 7% interest (round correctly)?
Possible Answers
10 months
10.24 months
120 months
10 years
10.24 years
Score:
1
2.
How long will it take a sum to triple if you can earn 7% interest (round correctly)?
Possible Answers
30 months
30 years
16.24 years
17.4 years
15.74 years
Score:
3.
Susan and Geoffrey
Susan and Geoffrey currently have gross monthly income of $5,000 per month. Their taxes and withholdings run $1,500 per month. Their monthly debt payments are currently running $200 per month. They are thinking about purchasing a new car and don't want to put themselves under to much financial stress. Their Financial Advisor told them to keep their debt limit ratio under 15%. They are asking you for advice on their options.
They ended up buying a new car and borrowed $15,000 for 60 months at 6.5 percent with monthly payments of $293.49. It turns out that they can comfortably afford to pay $375 per month. How many months would it take to pay off this loan if they made monthly payments of $375 instead of $293.49?
Possible Answers
51.45 months
63.50 months
45.20 months
39.75 months
Score:
4.
Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars in a bank account that will earn 6%. If you graduate in four years, how much will be on deposit?
Possible Answers
$7,120.89
$6,142.96
$5,960.47
$6,312.38
Score:
1/1
5.
What would be the interest rate on a loan of $39,927.10 that you paid off with annual payments of $10,000 for each of the next five years?
Possible Answers
8%
10%
15%
21%
26%
Score:
6.
This helpful investment rule-of-thumb tells you approximately how many years it takes for a sum of money to double in size.
Possible Answers
rule of compound interest
rule of 72
rule of 100
rule of future value
rule of annuity doubling
Score:
7.
Consider that you are paying back a fully amortized loan. Which of the following statements is most correct?
Possible Answers
Later loan payments involve larger amounts of principal repayment.
The actual loan payments vary from year to year.
After the last loan payment is made, there is still a large principal repayment remaining.
Early loan payments include smaller amounts of interest payments.
none of these statements are true.
Score:
1/
8.
The dollar value of an investment at some future point in time is also known as
Possible Answers
future value.
present value.
compounded annuity.
the time value of money.
calculated value.
Score:
9.
The more compounding periods per year decreases the total amount of interest you receive over the year.
Possible Answers
True
False
Score:
1/1
10.
When a loan is paid off in equal installments, this is called a(n) ________ loan.
Possible Answers
amortized
discounted
balloon
reverse annuity
none of these
Score:
11.
The ________ states that a dollar today is worth more than a dollar in the future.
Possible Answers
Future value of money
Discounted value of money
Adjusted value of money
Time value of money
Annuity value of money
Score:
12.
You have just placed $500 in a bank account that earns 6%. How much will you have on deposit after 6 years?
Possible Answers
$652.48
$709.26
$787.66
$758.66
$801.68
Score:
1/1
13.
Suppose that you invested $100 in a bank account that earned 10%. How much would you have on deposit at the end of 10 years?
Possible Answers
$259.37
$238.55
$293.74
$214.46
$279.23
Score:
14.
What would be the interest rate on a loan of $9,981.78 that you paid off with annual payments of $2,500 for each of the next five years?
Possible Answers
8%
10%
15%
21%
26%
Score:
1/1
15.
In an amortized loan the earlier payments have a larger portion of the payment going to pay interest and a smaller portion of the payment to pay down the principle.
Possible Answers
True
False
Score:
16.
You invest $1,000 at age 20 at 12% and leave it alone until age 65. By applying the rule of 72, you will have amassed more than ________ by age 62.
Possible Answers
$256,000
$96,000
$64,000
$128,000
none of these
Score:
17.
Why should you care about the power of compounding and the time value of money?
Possible Answers
It is critical to obtaining your future financial goals.
The sooner you start saving for retirement, the less you have to save each year.
You may outlive your Social Security and employer's retirement plan.
It is possible to build a large estate for yourself, spouse, and children.
all of these
Score:
18.
What is the price you would be willing to pay today for an IOU for $500 due in one year if you want to earn at least 16%?
Possible Answers
$480.00
$431.03
$450.00
$395.33
$418.23
Score:
19.
Which one of the following is the "enemy" of compound interest and makes it very difficult to reach your financial goals?
Possible Answers
inflation
annuity factor
simple interest
compound frequency
none of these
Score:
20.
The future value of a current investment earning a positive rate of return is always greater than the present value of the investment.
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