Fin 300 Chapter 5
8 Questions
| Attempts: 35
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Questions and Answers
- 1.
Say you leave $100 invested in the bank savings account at 10 percent interest for five years. What is the simple interest and the interest on interest for the five year period?
- A.
$50 ; $61.05
- B.
$61.05 ; $61.05
- C.
$50 ; $11.05
- D.
$161.05
Correct Answer
C. $50 ; $11.05 -
- 2.
Simple interest earned each year on an investment remains constant.
- A.
True
- B.
False
Correct Answer
A. True -
- 3.
Interest on interest increase every year.
- A.
True
- B.
False
Correct Answer
A. True -
- 4.
The growth in the future value over time is linear.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The growth in the future value over time is not linear, but exponential.Rate this question:
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- 5.
What is the future value of $5,000 invested for 10 years at 15 percent interest. Also, what is the simple interest and interest on interest for the 10 year period.
- A.
20, 227.29 ; $7,500 ; $12,727.79
- B.
$20, 227.29 ; $7,500 ; $ 7,727.79
- C.
$20,227.79 ; $12,500 ; $ 7,727.79
- D.
Cannot be determined
Correct Answer
B. $20, 227.29 ; $7,500 ; $ 7,727.79 -
- 6.
The more frequently interest payments are compounded, the larger the future value of $1 for a given time period.
- A.
True
- B.
False
Correct Answer
A. True -
- 7.
Compounded interest are composed of:
- A.
Interest on Interest
- B.
Simple interest
- C.
Interest on Interest and Simple interest
- D.
Time value of money
Correct Answer
C. Interest on Interest and Simple interest -
- 8.
The process of converting the initial amount into future value is called:
- A.
Discounting
- B.
Compounding
- C.
Both A and B
- D.
Future conversion
Correct Answer
B. Compounding -
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Mar 21, 2022Quiz Edited by
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Mar 06, 2010Quiz Created by
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