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 1.040742. How much interest will he earn at the end of one year? a. $2,142.00 c. $56.09 b. $1,500.07 d. $203.71 2. 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 1.221386. What is the interest earned? a. $23,906.00 c. $165.28 b. $1,439.01 d. $1,896.50 3. 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 1.231994. What is the interest earned? a. $10,439.73 c. $6,578.06 b. $23,897.00 d. $11,567.25 4. 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 1.033032. How much interest will she earn at the end of one year? a. $21.90 c. $214.71 b. $45.71 d. $225.90 Figure 12.1. 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% 1.040443 1.040417 1.040339 3.25% 1.044031 1.042989 1.042899 3.50% 1.044618 1.044533 1.045463 3.75% 1.048210 1.048152 1.048032 4.00% 1.050808 1.050743 1.050605 4.25% 1.053413 1.053339 1.053183 4.50% 1.056025 1.055949 1.055766 4.75% 1.058643 1.058549 1.058354 5.00% 1.061267 1.061163 1.060946 5.25% 1.063899 1.063783 1.063544 5. Use Figure 12.1. 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. $0.96 6. Use Figure 12.1. 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?
a. $0.56 c. $0.65 b. $0.34 d. $0.78 7. 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 1.040742. 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 1.040604. What is the difference in the amount of interest earned for each investment? a. $0.96 c. $0.87 b. $0.81 d. $0.88 8. 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 1.349817. What is the amount at maturity? a. $956.90 c. $26,996.34 b. $765.00 d. $4,980.00 9. 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 1.040742. 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 1.040604. What is the difference in the amount of interest earned for each investment? a. $21.99 c. $45.99 b. $41.71 d. $23.09 10. 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 1.085088. What is the effective annual yield? a. 3.630% c. 8.509% b. 7.032% d. 2.143% 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 1.069824. What is the effective annual yield? a. 5.658% c. 4.864% b. 6.982% d. 6.123% 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 1.470089. What is the effective annual yield? a. 18.457% c. 47.009% b. 16.824% d. 10.112% Figure 12.2. 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% 1.051267 1.051162 1.050945 5.25% 1.053899 1.053782 1.053543 5.50% 1.056536 1.056408 1.056145 5.75% 1.059180 1.059040 1.058752 6.00% 1.061831 1.061678 1.061364 6.25% 1.064489 1.064322 1.063980 6.50% 1.067153 1.066972 1.066602 6.75% 1.069824 1.069628 1.069228 7.00% 1.072501 1.072290 1.071859 7.25% 1.075185 1.074958 1.074495
13. Use Figure 12.2. 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. 6.183% c. 5.219% b. 7.186% d. 7.192% 14. Use Figure 12.2. 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. 4.697% c. 6.398% b. 5.398% d. 5.426% 15. Use Figure 12.2. 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. 5.875% c. 6.567% b. 4.298% d. 5.378% Figure 12.3. 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% 1.005012 1.005011 1.005009 0.75% 1.007528 1.007526 1.007521 1.00% 1.010050 1.010046 1.010038 1.25% 1.012578 1.012572 1.012559 1.50% 1.015113 1.015104 1.015085 1.75% 1.017654 1.017641 1.017615 2.00% 1.020201 1.020184 1.020151 2.25% 1.022754 1.022733 1.022691 2.50% 1.025314 1.025288 1.025235 2.75% 1.027881 1.027849 1.027785 3.00% 1.030453 1.030416 1.030339 16. Use Figure 12.3. 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. 2.779% c. 1.244% b. 5.124% d. 2.589% 17. Use Figure 12.3. 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. 4.487% c. 3.048% b. 3.045% d. 1.257% 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. $1,547.20 c. $2,154.54 b. $2,328.50 d. $2,316.00
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. $33,746 20. Holly Wright purchased 2,000 shares of a motor company stock at $19.97 per share. Her online broker s charge for commission was $13.80. What is the total cost for the stock? a. $39,940.00 c. $94,658.25 b. $40,028.65 d. $39,953.80 21. 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. $45,876.00 c. $58,210.98 b. $45,982.01 d. $60,129.34 22. 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. $2,982 23. 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. $45,697.55 c. $150,390.00 b. $178,694.00 d. $160,287.32 24. 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. $1,800.00 c. $45.90 b. $756.36 d. $70.98 25. 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. $10,964.33 c. $11,892.10 b. $15,917.00 d. $12,579.00 26. 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. $11.97 27. 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. $22.00 28. 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%
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. 2.334% c. 2.634% b. 3.465% d. 6.587% 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 $28,275.50. He sold the stock for $52.25 per share and paid a sales commission of $32.00. 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 $32.52. 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 $45.68. Each transaction has a commission of $27 plus $0.03 per share. What is the profit or loss for the sale? a. $1,237.00 profit c. $2,539.60 profit b. $2,765.35 profit d. $3,456.32 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 $17.50. What was the profit or loss from the sale? a. $325.85 loss c. $672.00 profit b. $563.64 profit d. $474.25 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
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. $150 43. 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. $8,251.30 c. $2,817.50 b. $5,656.11 d. $4,589.14 44. 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. $3,548.75 c. $4,800.50 b. $2,183.50 d. $5,697.22 45. 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%
CHAPTER 12 TEST - Personal Finance 04/2014 Answer Section MULTIPLE CHOICE 1. ANS: D DIF: Basic REF: Section 12-1 2. ANS: B DIF: Basic REF: Section 12-1 3. ANS: A DIF: Basic REF: Section 12-1 4. ANS: C DIF: Basic REF: Section 12-1 5. ANS: B DIF: Average REF: Section 12-1 6. ANS: B DIF: Average REF: Section 12-1 7. ANS: A DIF: Average REF: Section 12-1 8. ANS: C DIF: Average REF: Section 12-1 9. ANS: B DIF: Average REF: Section 12-1 10. ANS: C DIF: Basic REF: Section 12-2 11. ANS: B DIF: Basic REF: Section 12-2 12. ANS: C DIF: Basic REF: Section 12-2 13. ANS: B DIF: Average REF: Section 12-2 14. ANS: C DIF: Average REF: Section 12-2 15. ANS: A DIF: Average REF: Section 12-2 16. ANS: A DIF: Average REF: Section 12-2 17. ANS: D DIF: Average REF: Section 12-2 18. ANS: B DIF: Basic REF: Section 12-3 19. ANS: D DIF: Basic REF: Section 12-3 20. ANS: D DIF: Basic REF: Section 12-3 21. ANS: A DIF: Average REF: Section 12-3 22. ANS: B DIF: Average REF: Section 12-3 23. ANS: C DIF: Average REF: Section 12-3 24. ANS: A DIF: Average REF: Section 12-3 25. ANS: B DIF: Average REF: Section 12-3 26. ANS: B DIF: Basic REF: Section 12-4 27. ANS: C DIF: Basic REF: Section 12-4 28. ANS: A DIF: Basic REF: Section 12-4 29. ANS: A DIF: Average REF: Section 12-4 30. ANS: C DIF: Average REF: Section 12-4 31. ANS: B DIF: Average REF: Section 12-4 32. ANS: C DIF: Average REF: Section 12-4 33. ANS: A DIF: Average REF: Section 12-4 34. ANS: C DIF: Basic REF: Section 12-5 35. ANS: B DIF: Basic REF: Section 12-5 36. ANS: A DIF: Basic REF: Section 12-5 37. ANS: D DIF: Average REF: Section 12-5 38. ANS: C DIF: Average REF: Section 12-5 39. ANS: A DIF: Average REF: Section 12-5 40. ANS: D DIF: Average REF: Section 12-5 41. ANS: B DIF: Average REF: Section 12-5
42. ANS: B DIF: Basic REF: Section 12-6 43. ANS: C DIF: Basic REF: Section 12-6 44. ANS: A DIF: Basic REF: Section 12-6 45. ANS: C DIF: Average REF: Section 12-6 46. ANS: B DIF: Average REF: Section 12-6 47. ANS: C DIF: Average REF: Section 12-6 48. ANS: A DIF: Average REF: Section 12-6