Question 1
. You buy a boat for $13,850. You must also pay tax and license fees of $980. You borrow $11,500 at 12.9% interest for 3 years
with monthly payments of $386.93. What is the total cost of the boat, including tax and license fees and finance charges?
. . . $26,330
. . . $28,759.48
. . . $14,830
. . . $17,259.48
.
Question 2
. On June 8, you get a boat loan. Your first payment is due July 8. You write out your check on July 8, drop it in a mailbox that
same day, it gets postmarked on July 9, and the lender receives it on July 10. For how many days is interest calculated?
. . . 30 days
. . . 31 days
. . . 32 days
. . . 33 days
.
Question 3
. On December 14, you get a 13.9% $1,700 furniture loan with monthly payments of $81.54. Your first payment is due January 14.
What is the balance after your first payment, assuming the lender receives your payment on January 11?
. . . $1,618.46
. . . $1,636.59
. . . $1,681.87
. . . $18.13
.
Question 4
. On April 29, Rayma Ramirez made a payment on her 7.75% car loan. After making the payment, the balance was $1,844.22. Rayma got
her income tax refund, and on May 21 she pays off the loan. What is the payoff amount?
. . . $1,844.22
. . . $142.93
. . . $1,987.15
. . . $1,852.83
.
Question 5
. Calculate the finance charge on a home equity loan based on an average daily balance of $97,552 during a 30-day billing period.
The lender charges 5.75% interest and calculates interest based on a daily periodic rate. Assume a 365-day year and round the daily
periodic rate to 8 decimal places.
. . . $467.44
. . . $15.37
. . . $461.03
. . . $1,536.78
.
Question 6
. Juan and Lisa are getting prequalified for a mortgage loan. Juan earns $3,800 a month; Lisa is a homemaker. Based on the price
home they hope to buy, the lender estimates property taxes at $2,450 a year and insurance at $680. Juan has a car payment of $322; Lisa’s
car is paid off. They each have a minimum credit card payment of $10. Based on a back-end ratio of 41%, what is the maximum monthly
payment they qualify for?
. . . $1,558.00
. . . $1,297.17
. . . $955.17
. . . $2,242.00
.
Question 7
. You get a $240,000 mortgage loan at 6.25% with a monthly payment (PI) of $1,477.72. What is your balance after your first
payment?
. . . $239.772.28
. . . $238.750
. . . $240,000
. . . $238,522.28
.
Question 8
. You get mortgage loan with a monthly payment (PI) of $1,342.57. The lender requires an escrow account. Property taxes are
currently $1,426 per year and insurance is currently $640 per year. Calculate your total monthly payment (PITI).
. . . $1,342.57
. . . $2,066.00
. . . $172.17
. . . $1,514.74
.
Question 9
. You get a 30-year mortgage loan of $185,000 at 5% interest. You make your first payment on March 1. Use your financial calculator
to calculate the calendar-year interest for Year 2.
. . . $9,188.02
. . . $9,048.38
. . . $7,666.19
. . . $9,072.14
.
Question 10
. You get a 30-year ARM at a rate of 5.25%. The rate is adjusted each year to the 1-year T-bill rate plus ½%. The loan has a 1%
annual cap. One year later the T-bill rate is 5.23%. In 2 years the T-bill rate is 6.47%. What is your interest rate for the third
year?
. . . 5.25%
. . . 5.73%
. . . 6.97%
. . . 6.73%
.
Question 11
. You apply for a home-equity loan. Your first mortgage has a current balance of $211,700. Based on an appraisal of $324,000 and
an 80% LTV ratio, what is the maximum line of credit you can get?
. . . $259,200
. . . $169,360
. . . $47,500
. . . $89,840
.
Question 12
. You get a $174,000 mortgage loan and incur the following loan costs: 1% origination fee, ½ point, $75 credit report fee, $550
appraisal fee, $639 title insurance fee, $350 processing fee, $100 closing fee, and $80 for recording. What are your total loan costs?
. . . $4,404
. . . $2,610
. . . $1,794
. . . $4,689
.
Question 13
. XYZ Corporation has 120,000 shares of common stock and 60,000 shares of cumulative preferred stock. The annual dividend of the
preferred stock is $1.50 per share. The only dividends paid last year were to preferred stockholders in the amount of $0.75 per share.
This year the board of directors decided to distribute $1,564,200 in dividends. If you own 50 shares of common stock, what is the amount
of your annual dividend?
. . . $11.91
. . . $595.50
. . . $13.04
. . . $651.75
.
Question 14
. Assume you buy 100 shares of stock at a price of $18.23 per share and incur brokerage fees of $110. What is your total cost?
. . . $128.23
. . . $12,823.00
. . . $1,933.00
. . . $1,713.00
.
Question 15
. A company reported annual earnings per share of $2.13. If the price is currently $87.13 per share, what is the PE ratio?
. . . 0.02
. . . 40.91
. . . 85.00
. . . 87.13
.
Question 16
. Suppose you sell a $1,000 bond at a price of 92.142 and incur brokerage fees of $85. Calculate your net proceeds.
. . . $7.14
. . . $915.00
. . . $1,006.42
. . . $836.42
.
Question 17
. Suppose you buy a $1,000 IBM 6¾ 23 bond. Assuming that the bond pays interest semiannually, what is the dollar amount of interest
you will receive each 6 months?
. . . $67.50
. . . $135.00
. . . $63.40
. . . $33.75
.
Question 18
. You are thinking of buying a 6.5% bond at a price of 94.613. The price indicates that the 6.5% coupon rate is greater than the
prevailing rate.
True
False
Question 19
. You buy four $5,000 Treasury bonds at a price of 89:18. What is the total price?
. . . $17,912.50
. . . $4,478.13
. . . $17,836
. . . $4,459
.
Question 20
. A mutual fund has investments with closing prices totaling $16,862,000, liabilities of $5,186,000, and 625,000 shares. What is
the NAV?
. . . $19.22
. . . $35.28
. . . $26.98
. . . $18.68
.
Question 21
. Your insurance bill allows you to pay the $390 six-month premium now or with 6 monthly payments of $75, starting today. What APR
would you pay with the installment plan?
. . . 73.30%
. . . 6.11%
. . . 4.25%
. . . 50.98%
.
Question 22
. You are thinking about getting an 21-year $100,000 mortgage loan at 5.5%. You will incur a total of $3,200 for origination fee,
points, mortgage insurance, and other costs. In addition, you will have to pay the first year’s hazard insurance premium of $410 and put
$360 into an escrow account. You project paying off the loan at the end of 4 years. What is your real APR, reflecting the early payoff?
. . . 0.54%
. . . 6.46%
. . . 5.5%
. . . 6.69%
.
Question 23
. If the average value of homes in your area has increased over the last 16 years from $280,000 to $500,000, what is the average
annual rate of increase?
. . . 0.3%
. . . 3.63%
. . . 44.28%
. . . 3.69%
.
Question 24
. You buy an 8% $1,000 corporate bond for $925. The bond pays interest at the end of each 6 months and matures in 20 years. What
is your YTM?
. . . 4.40% compounded semiannually
. . . 9.18% compounded semiannually
. . . 8.80% compounded semiannually
. . . 7.84% compounded semiannually
.
Question 25
. Martin Good purchased some corporate stock 7 years ago for $6,000. He received quarterly dividends of $60 at the end of each
quarter for the first 4 years, nothing for the fifth year, and $65 at the end of each quarter for the last 2 years. Immediately after
receiving the last quarterly dividend, Martin sold the stock for $14,500. What interest rate, compounded quarterly, did he earn?
. . . 15.26% compounded quarterly
. . . 3.18% compounded quarterly
. . . 14.76% compounded quarterly
. . . 3.69% compounded quarterly
.
Question 26
. You have the chance to buy a promissory note in which you receive 45 monthly payments of $200 (starting a month from now),
followed by 140 monthly payments of $250. If you want to earn 10% compounded monthly, what price should you pay for the note?
. . . $20,812.63
. . . $17,007.93
. . . $2,006.86
. . . $21,668.28