In October 2019, the average rent for a two-bedroom apartment in Ottawa was approximately $1,720 per month.

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Question:

In October 2019, the average rent for a two-bedroom apartment in Ottawa was approximately $1,720 per month. Whereas the average house price was approximately $465,000. Assume for all payments that they are made at the end of each period.

Question 21 (1 point)

Based on the 5.5 percent mortgage rate (compounded semi-annually), what would be the Effective Annual Rate for this mortgage rate?

Question 21 options:

	5.235%
	5.576%
	6.551%
	5.023%
	6.356%

Question 22 (1 point)

What would be the Effective Monthly Rate for this mortgage rate? (1 mark)

Question 22 options:

	0.4532%
	0.4722%
	0.2937%
	0.3715%
	0.3485%

Question 23 (2 points)

Based on 5.5 percent mortgage rate (compounded semi-annually), what would be the largest mortgage amount that one could afford, based on a 20-year mortgage with monthly payments that are equal to the average rental payment of $1,720. (2 marks)

Question 23 options:

	$251,318.22
	$420,465.15
	$345,213.25
	$272,840.41
	$284,200.75

Question 24 (1 point)

Based on the same mortgage rate above (i.e. 5.5% semi-annually compounded with monthly payments), what would be the mortgage payments on the average Ottawa house (assuming 90% financing) of $465,000. (1 mark)

Question 24 options:

	$3,112.82
	$2,638.25
	$3,010.62
	$2,864.18
	$2,574.56

Question 25 (1 point)

Assume that you invest the difference between the mortgage payment (Question 24) and the rental payment in a balanced mutual fund that averaged a 5 percent return (compounded monthly) for 20 years, approximately how much would you have accumulated (Future Value) (1 mark).

Question 25 options:

	$470,295.49
	$477,429.85
	$501,944.32
	$351,251.28
	$384,274.23

Question 26 (1 point)

Assume that the house prices increase an average of 3 percent per year (annual compounding) for the next 20 years, what would the future value of the $465,000 house. (1 mark)

Question 26 options:

	$839,841.72
	$975,212.74
	$756,891.25
	$902,561.44
	$912,272.45

Final Exam Part D.1

To save for $2,000 in five years to purchase a new gaming computer, one must save different amounts, depending on the frequency of the payments. Assuming one was contributing to a Tax-Free Savings Account (TFSA) that is paying a 2.5 percent rate of return, what would be required payments based on the following scenarios.

Question 27 (1 point)

One deposit (lump sum) paid at the beginning of the five-year period, which compounded annually at 2.5 percent? (1 mark)

Question 27 options:

	$1,427.18
	$1,882.88
	$1,309.64
	$1,767.71
	$1,956.28

Question 28 (1 point)

Monthly Payments, with 2.5 percent that is compounded monthly? (payments are made at the BEGINNING of the Payment Period) (1 mark)

Question 28 options:

	$40.97
	$26.57
	$29.08
	$31.26
	$34.57

Question 29 (1 point)

Biweekly Payments (26 payments per year), with 2.5 percent that is compounded biweekly? (payments are made at the BEGINNING of the Payment Period) (1 mark)

Question 29 options:

	$16.89
	$16.21
	$14.44
	$17.05
	$15.23

Question 30 (1 point)

Annual Payments (5 payments over 5 years), with 2.5 percent that is compounded annually? (Remember payments are made at the BEGINNING of the Payment Period) (1 mark)

Question 30 options: