Money and Banking Midterm Examination 1. According to the Truth-in Savings Act,

Question

Money and Banking Midterm Examination 1. According to the Truth-in Savings Act, the interest rate that banks are required to report when you deposit money in an account, which allows you to compare the returns on different accounts that compound interest with different frequencies, is known as a. capital-gains yield. b. annual percentage yield c current yield d. total return. 2, present value of the bond is Consider a one year bond that pays S 1000 one year from now, if the rate of discount is 7%, the a. $930.00 b. $93458 c, $99300 d. $993.46 3. Consider a one-year discount bond that has present value of $1000. If the rate of discount is 7%, the future value of the bond (the amount the bond pays in one year) is a. $930.00 b. $93458 $1000.00 d. $1070.00 4. Consider a perpetuity that pays $100 every year. if the rate of discount is 7%, the present value of the bond is a. $107.00 b. $1300.00 C. $1428.57 D. $1700.00 5. Suppose you take out a home equity loan of $100,000 for 5 years at an annual interest rate of s percent, with payments to be made monthly. What will your monthly peyment be? a. $1320.71 b.$1887.12 $ 1924.79 d. $5282.82

Explanation / Answer

1 b. Annual percentage yield 2 Present value of bond=$1000/(1+0.07)=$934.58 Answer is b. $934.58 3 Future value of bond=1000*(1+0.07)=$ 1070 Answer is d. $1070 4 Present value pf perpetuity=100/0.07=$1428.57 Answer is c. $1428.57 5 Total monthly payments for 5 years=5*12=60 Interest rate per month=0.05/12=0.0042 Monthly instalment=$100000/Present value interest annuity factor@0.0042% for 60 years=100000/52.9902=1887.14 Answer is c. $1887.12

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.