Question: If a security currently worth $4,000 will be worth $6,000 in one year, what is the implied interest rate the investor will earn on the
If a security currently worth $4,000 will be worth $6,000 in one year, what is the implied interest rate the investor will earn on the security ? (assuming that no additional deposits or withdrawals are made). A. 50% B. 10% C. 35% D. 5%
You plan to buy a financial product today. You expect that the financial product will give you $100 at the end of first 5 years (that is, you receive $100 starting one year from today for 5 years). Your required rate of return is 10%. If this same financial product has an actual market price of $370, what is the expected rate of return E(r)? Should you buy this financial product? A. 9.0076%; Buy B. 10.9559%; Buy C. 9.0076%; Don't Buy D. 11.2276%; Don't Buy
Bank A pays a 5.75% per year, compounded semi-annually, on time deposits. What is the EAR for Bank A?
| A. | 5.83% | |
| B. | 5.95% | |
| C. | 6.20% | |
| D. | 6.00% |
If the rate of interest rate (r) is 6%, then you should be indifferent about receiving $800 today or ____________.
| A. | $800.00 in one year | |
| B. | $600.00 in one year | |
| C. | $848.00 in one year | |
| D. | $423.46 in one year |
An ordinary annuity selling at $5,000 today promises to make equal payments at the end of each year for the next four years. If the annuity's appropriate interest rate remains at 6% during this time, how much will be the annual annuity payment?
| A. | $1,442.96 | |
| B. | $1,742.96 | |
| C. | $1,642.96 | |
| D. | $1,542.96 |
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