Practice Test Section 6 - Mod 16-18

Question 1

Kramer put $12,000 into an investment on August 10th and took out $3,000 on September 31st. How should the cash flows be recorded (that is, money direction)?

A. +$12,000 and –$3,000
B. +$12,000 and –$9,000
C. –$12,000 and +$3,000
D. –$12,000 and –$3,000

Answer 1

C. –$12,000 and +$3,000

Question 2

What does RPN represent?
A. rational positive numbers
B. really powerful numbers
C. return on net principal
D. Reverse Polish notation

Answer 2

D. Reverse Polish notation

Question 3

Which of the following terms is commonly referred to as an average?
A. array
B. mean
C. median
D. mode

Answer 3

B. mean

Question 4

Wheatley is considering a mortgage with a face amount of $195,000 and is debating whether to get the 30-year mortgage at 6% or the 20-year mortgage at 5.5%. What is the difference between the two monthly payments?

A. $61.93
B. $172.26
C. $227.92
D. $2,150.93

Answer 4

B. $172.26

Question 5

Peterson began saving $10 per week and deposited it every month in her money
market account, earning 4.25% and compounding monthly. If she continues this
practice, how much will she have after 10 years?
A. $5,968.29
B. $6,289.15
C. $6,316.04
D. $6,465.65

Answer 5

D. $6,465.65

Question 6

What amount must be deposited annually in an account earning 7.5% interest that compounds annually to accumulate $100,000 in 15 years?
A. $302.01
B. $3,828.72
C. $3,979.46
D. $7,068.59

Answer 6

B. $3,828.72

Question 7

What should Greenberg pay for the right to receive $60,000 in 7 years at 10% interest compounded quarterly?

A. $29,976.06
B. $29,991.67
C. $30,052.67
D. $30,789.49

Answer 7

C. $30,052.67

Question 8

A simple measure of dispersion of the difference between the highest and lowest value in a data set is known as the
A. mean.
B. range.
C. standard deviation.
D. variate.

Answer 8

B. range.

Question 9

An annuity functions in a similar manner to what time value component?
A. future of $1
B. future of $1 per period
C. present value of $1 per period
D. sinking fund factor

Answer 9

B. future of $1 per period