CHAPTER 12 TEST - Personal Finance 04/2014

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1 CHAPTER 12 TEST - Personal Finance 04/2014 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Trey Gorman invests $5,000 in a 1-year certificate of deposit that earns interest at an annual rate of 4 percent compounded monthly. The amount per $1.00 is How much interest will he earn at the end of one year? a. $2, c. $56.09 b. $1, d. $ Florence Tyler invests $6,500 in a 4-year certificate of deposit that earns interest at an annual rate of 5 percent compounded daily. The amount per $1.00 is What is the interest earned? a. $23, c. $ b. $1, d. $1, Matt Gilkey invests $45,000 in a 4-year certificate of deposit that earns interest at an annual rate of 5.25 percent compounded quarterly. The amount per $1.00 is What is the interest earned? a. $10, c. $6, b. $23, d. $11, Anne Deno invests $6,500 in a 1-year certificate of deposit that earns interest at an annual rate of 3.25 percent compounded daily. The amount per $1.00 is How much interest will she earn at the end of one year? a. $21.90 c. $ b. $45.71 d. $ Figure Use this table with the question(s) below, as needed. Amount of $1.00 Invested, Daily, Monthly, and Quarterly Compounding Annual Interest Period 1 year Rate Daily Monthly Quarterly 3.00% % % % % % % % % % Use Figure Phillip Stobel can invest $6,000 in a 1-year CD at 4 percent compounded monthly or a 1- year CD compounded daily. Determine the amount at maturity of each investment. What is the difference in the amounts? a. $0.56 c. $1.02 b. $0.39 d. $ Use Figure Janise Smithson can invest $4,000 in a 1-year CD at 3.5 percent compounded daily or a 1- year CD compounded monthly. Determine the amount at maturity of each investment. What is the difference in the amounts?

2 a. $0.56 c. $0.65 b. $0.34 d. $ Scott Harris can invest $7,000 in a 1-year CD that earns interest at an annual rate of 4 percent compounded monthly. The amount per $1.00 is He can also invest $7,000 in a 1-year CD at an annual rate of 4 percent compounded quarterly. The amount per $1.00 is What is the difference in the amount of interest earned for each investment? a. $0.96 c. $0.87 b. $0.81 d. $ Sabrina Duncan invests $20,000 in a 4-year certificate of deposit that earns interest at an annual rate of 7.5 percent compounded daily. The amount per $1.00 is What is the amount at maturity? a. $ c. $26, b. $ d. $4, Simon Kovach can invest $8,000 in a 1-year CD that earns interest at an annual rate of 4 percent compounded monthly. The amount per $1.00 is He can also invest $7,000 in a 1-year CD at an annual rate of 4 percent compounded quarterly. The amount per $1.00 is What is the difference in the amount of interest earned for each investment? a. $21.99 c. $45.99 b. $41.71 d. $ Christina Stratton invested $8,000 in a certificate of deposit for 4 years. The certificate earns interest at an annual rate of 8.25 percent compounded quarterly. The amount per $1.00 is What is the effective annual yield? a % c % b % d % 11. Ralph Kramer invested $11,000 in a certificate of deposit for 1 year. The certificate earns interest at an annual rate of 6.75 percent compounded daily. The amount per $1.00 is What is the effective annual yield? a % c % b % d % 12. Jody Azbil invested $25,000 in a certificate of deposit for 4 years. The certificate earns interest at an annual rate of 9.75 percent compounded quarterly. The amount per $1.00 is What is the effective annual yield? a % c % b % d % Figure Use this table with the question(s) below, as needed. Amount of $1.00 Invested, Daily, Monthly, and Quarterly Compounding Annual Interest Period 1 year Rate Daily Monthly Quarterly 5.00% % % % % % % % % %

3 13. Use Figure Randy Strigle can invest $12,000 at either 6 percent compounded daily for 1 year or 7 percent compounded quarterly for 1 year. Use the figure to calculate the interest. What is the effective annual yield of the better investment? a % c % b % d % 14. Use Figure Jane Bennett can invest $20,000 at either 5.5 percent compounded monthly for 1 year or 6.25 percent compounded quarterly for 1 year. Use the figure to calculate the interest. What is the effective annual yield of the better investment? a % c % b % d % 15. Use Figure Brent McKay can invest $22,000 at either 5.25 percent compounded monthly for 1 year or 5.75 percent compounded quarterly for 1 year. Use the figure to calculate the interest. What is the effective annual yield of the better investment? a % c % b % d % Figure Use this table with the question(s) below, as needed. Amount of $1.00 Invested Daily, Monthly, and Quarterly Compounding Annual Interest Period 1 year Rate Daily Monthly Quarterly 0.50% % % % % % % % % % % Use Figure Kim Sanderson can invest $15,000 at either 1.25 percent compounded monthly for 3 years or 2.75 percent compounded quarterly for 3 years. Use the figure to calculate the interest. What is the effective annual yield of the better investment? a % c % b % d % 17. Use Figure John Neff can invest $35,000 at either 0.75 percent compounded daily for 4 years or 1.25 percent compounded monthly for 4 years. Use the figure to calculate the interest. What is the effective annual yield of the better investment? a % c % b % d % 18. Abigail Eddy purchased 200 shares of stock at $11.58 per share. Her online stockbroker charged her a $12.50 commission. What is the total amount that she paid for the stock? a. $1, c. $2, b. $2, d. $2,316.00

4 19. Barry Olson just purchased 800 shares of an electronics corporation stock at $42.17 per share. His online broker charged him a $10.00 commission. What was the total cost of the stock? a. $22,489 c. $42,458 b. $33,579 d. $33, Holly Wright purchased 2,000 shares of a motor company stock at $19.97 per share. Her online broker s charge for commission was $ What is the total cost for the stock? a. $39, c. $94, b. $40, d. $39, Brian Gray buys 1,200 shares of food company stock at $38.20 per share. His online broker charged him $0.03 per share for commission. What is the total cost of the stock? a. $45, c. $58, b. $45, d. $60, Callie Zimmerman purchased 100 shares of a toy company stock at $12.58 per share. Her online stock broker charged $0.04 per share for commission. What is the total cost of the stock? a. $1,397 c. $1,554 b. $1,262 d. $2, Brett Palmer purchased 3,000 shares of a juice company stock at $50.10 per share. His broker charges $30.50 for fewer than 2,000 shares, or $0.03 per share for 2,000 or more shares. What is the total cost of the stock? a. $45, c. $150, b. $178, d. $160, Audrey Page purchased 2,500 shares of a discount corporation stock at $0.70 per share. Her broker s commission was $22.75 for fewer than 1,000 shares, or $0.02 per share for 1,000 or more. What was total cost of the stock? a. $1, c. $45.90 b. $ d. $ After consulting with his broker, Bruce Sowder purchased 100 shares of a computer company stock at $44.41 per share. He also purchased 600 shares of a second company s stock at $19.08 per share. Sowder s online broker charges $0.04 per share. What is the total cost of the stock including the commission? a. $10, c. $11, b. $15, d. $12, Michelle Smith bought 30 shares of James Company stock at $34 per share. The company paid annual dividends of $0.42 per share. What is the total annual dividend? a. $9.78 c. $1.69 b. $12.60 d. $ Bryant Peters bought 75 shares of Elkston stock for $24.13 per share. The company paid annual dividends of $0.29 per share. What is the total annual dividend? a. $32.10 c. $21.75 b. $21.99 d. $ Carrie James bought 100 shares of Parks stock for $52.89 per share. The company paid annual dividends of $0.38 per share. What is the total annual yield? a. 0.72% c. 0.97% b. 0.23% d. 0.45% 29. Neil Rubins owns 200 shares of Cleveland Company stock. The stock ranged from a low of $42.35 to a high of $48.56 last year. The annual dividend is $1.75. What is the annual yield based on the high? a. 3.6% c. 1.75% b. 6.9% d. 2.35% 30. Shirley Winter owns 300 shares of Jellico stock. The stock ranged from a low of $25.97 to a high of $36.45 last year. The annual dividend is $1.59. What is the annual yield based on the low? a. 6.54% c. 6.12%

5 b. 5.79% d. 5.28% 31. Taylor Stiles owns 75 shares of pharmaceutical stock at $24.75 per share. The annual dividend is $0.68. What is the annual yield? a. 2.56% c. 1.36% b. 2.75% d. 2.78% 32. Caroline Witnet owns 300 shares of Vos Labs stock. The stock ranged from a low of $35.69 to a high of $40.12 last year. The annual dividend is $0.94. What is the annual yield based on the low? a % c % b % d % 33. Adric Johnson owns 300 shares of Mew and Company stock. The stock ranged from a low of $25.97 to a high of $36.45 last year. The annual dividend is $1.59. What is the annual yield based on the low? a. 6.12% c. 9.25% b. 7.85% d. 6.45% 34. Otessa Posey bought 2,000 shares of Print Company stock for $12,780. She sold the stock for $7 per share and paid a sales commission of $26. What is the profit or loss from the sale? a. $1,328 loss c. $1,194 profit b. $206 profit d. $1,278 loss 35. Devon Dyce bought 550 shares of stock for $28, He sold the stock for $52.25 per share and paid a sales commission of $ What is the profit or loss from the sale? a. $200 loss c. $490 profit b. $430 profit d. $500 profit 36. Melika Randoph bought 1,500 shares of Huge Corporation stock for $155,250. She sold the stock for $101 per share and paid a sales commission of $39. What is the profit or loss from the sale? a. $3,789 loss c. $4,782 profit b. $3,549 profit d. $3,456 loss 37. Terell Lewis bought 1,200 shares of International Hotels stock at $31.45 per share. He held the stock for 6 months and sold it at $ Each transaction has a commission of $30 plus $0.02 per share. What is the profit or loss for the sale? a. $3,458 loss c. $3,045 loss b. $2,453 profit d. $1,176 profit 38. Tanesha Robertson bought 80 shares of White Air Lines stock at $13.20 per share. She held the stock for one year and sold it at $ Each transaction has a commission of $27 plus $0.03 per share. What is the profit or loss for the sale? a. $1, profit c. $2, profit b. $2, profit d. $3, loss 39. Calvin Tolbert purchased 400 shares of electronics stock for $27,200. He held the stock for 6 months and sold it at $67.88 per share. Each transaction has a commission of $30 plus $0.03 per share. What is the profit or loss for the sale? a. $132 loss c. $142 profit b. $163 loss d. $120 loss 40. Jamaar Thomas and his wife owned 175 shares of Newfeld Communications stock. They originally paid $2.50 per share for the stock. They needed cash so they sold at the current price of $5.31 per share. Their sales commission was $ What was the profit or loss from the sale? a. $ loss c. $ profit b. $ profit d. $ profit 41. Vanessa Robinson bought 350 shares of a restaurant s stock for $8,519. She held the stock for one year and sold it at its current price of $23.80 per share. Each transaction has a commission of $30 plus $0.02 per share. What is the profit or loss for the sale? a. $189 loss c. $373 profit

6 b. $263 loss d. $381 profit 42. Jarell Tarver purchased a $2,000 bond at the quoted price of 75. The bond paid interest at a rate of 6 percent. What is the annual yield? a. $65 c. $75 b. $120 d. $ Maya Franklin purchased a $3,500 bond at the quoted price of 80. The bond paid interest at a rate of 5 percent. What is the cost of the bond? a. $8, c. $2, b. $5, d. $4, Jefferson Wilkens purchased a $4,250 bond at the quoted price of 83. The bond paid interest at a rate of 7 percent. What is the cost of the bond? a. $3, c. $4, b. $2, d. $5, Lenisa Finley purchased a $1,000 bond at the quoted price of 80. The bond paid interest at a rate of 6 percent. What is the annual yield? a. 6.78% c. 7.48% b. 5.24% d. 6.26% 46. Kendrick Campbell purchased a $1,000 bond at the quoted price of 85. The bond paid interest at a rate of 4 percent. What is the annual yield? a. 6.75% c. 5.21% b. 4.69% d. 4.96% 47. Lalia Herrera purchased a $5,000 bond at the quoted price of 81. The bond paid interest at a rate of 6 percent. What is the annual yield? a. 6.59% c. 7.34% b. 9.86% d. 7.89% 48. Antonia Molina purchased a $3,000 bond at a quoted price of 92. The bond paid interest at a rate of 5 percent. What is the annual yield? a. 5.39% c. 2.31% b. 4.29% d. 8.74%

7 CHAPTER 12 TEST - Personal Finance 04/2014 Answer Section MULTIPLE CHOICE 1. ANS: D DIF: Basic REF: Section ANS: B DIF: Basic REF: Section ANS: A DIF: Basic REF: Section ANS: C DIF: Basic REF: Section ANS: B DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: C DIF: Basic REF: Section ANS: B DIF: Basic REF: Section ANS: C DIF: Basic REF: Section ANS: B DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: D DIF: Average REF: Section ANS: B DIF: Basic REF: Section ANS: D DIF: Basic REF: Section ANS: D DIF: Basic REF: Section ANS: A DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: B DIF: Basic REF: Section ANS: C DIF: Basic REF: Section ANS: A DIF: Basic REF: Section ANS: A DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: C DIF: Basic REF: Section ANS: B DIF: Basic REF: Section ANS: A DIF: Basic REF: Section ANS: D DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: A DIF: Average REF: Section ANS: D DIF: Average REF: Section ANS: B DIF: Average REF: Section 12-5

8 42. ANS: B DIF: Basic REF: Section ANS: C DIF: Basic REF: Section ANS: A DIF: Basic REF: Section ANS: C DIF: Average REF: Section ANS: B DIF: Average REF: Section ANS: C DIF: Average REF: Section ANS: A DIF: Average REF: Section 12-6

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