1) You have a choice between the following two options: a lump-sum payment of $100,000 or an annual instalment of $10,000 over the next 20 yeaqrs. At what interest rate, r, will you be indifferent between these two options?

a) 10.00%

b) 7.75%

c) 5.56%

d) 2.74%

e) 50.00%

2)Fixed-rate preferred stock is an example of

a) an annuity due

b)a growing annuity

c) a perpetuity

d) an ordinary annuity

e) a growing perpetuity

3) What is the effective rate (EAR) for a loan with a quoted rate of 7% APR compounded weekly?

a) 7.00%

b) 7.12%

c) 7.19%

d) 7.22%

e) 7.25%

4) When you go into a car dealership to buy a car, thecar salesman must quote the financing rate in terms of

a) effective annual rate

b) effective periodic rate

c) periodic percentage rate

d) annual percentage rate

e) annual market rate

5) Juilet has a 10-year mortgage of $350,000 with an interest rate of 4.5% APR, compounded semi-annually, Mortgage payments are made at the beginning of each month. What is the monthly mortgage payment?

a) $3,606.93

b) $3,620.33

c) $4,927.58

d) $4,941.91

e) $221, 962.27

6) A 10 year investment will pay $2,500 at the end of this year, and the payments will grow at a rate of 5% per year. The required return is 15%. What is the present value of this investment?

a) $10,170.40

b) $12,228.16

c) $14,934.05

d) $25,000.00

e) $25,714.29

7) An investment will pay $25 per year (indefinitely), starting in one year's time. The annual payments will grow at a rate of 3% per year. If the price of this investment is $200, what is the rate of return?

a) 11.25%

b) 14%

c) 14.25%

d) 15%

e) 15.50%

8)Mike Smith just turned 16 years old. He wishes to buy a used car in one year, and he is willing to spend $5,000. He plans to work part-time and put all his monthly earnings into a bank account that will pay 0.5% interest per month. How much must he save per month to be able to purchase the car in one year?

a) $754.72

b) $416.67

c) $405.33

d) $333.33

e) $323.85

9) Given the following information, calculate the rate of return.

price =$501.88

time to maturity = 10 years

annual payment = $100

type = ordinary annuity

a) 11.65%

b) 12%

c) 15%

d) 15.73%

e) 20.09%

10) what is the effective annual rate on an investment that pays an interest rate of 8.25% continuously?

a) 6.5%

b) 6.7%

c) 6.4%

d) 4.5%

e) 8.6%