Mathematics for Business and Personal Finance

Chapter 12: Investments

Practice Tests

1
Ray Vaughn invests $1,500 in a 1-year certificate of deposit that earns interest at an annual rate of 7% compounded monthly. The amount per $1.00 is 1.072290. How much interest will he earn at the end of one year?
A)$60.00
B)$105.00
C)$108.44
D)$1,608.44
2
Jacquelyn French deposits $12,000 in a 4-year CD that earns interest at an annual rate of 3.25% compounded daily. Find the amount of the CD in 4-years.

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A)$13,665.86
B)$13,663.54
C)$13,529.89
D)$13,393.66
3
ALGEBRA Use the compound interest formula to compute the interest earned on a $6,000 investment in a 1-year CD that earns interest at an annual rate of 2% compounded monthly.

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r = rate per period
n = number of periods
A)$10.00
B)$121.11
C)$142.35
D)$32,151.34
4
Tina Ahern invested $2,000 in a certificate of deposit for 3 years. The certificate earns interest at an annual rate of 7.5% compounded quarterly. What is the effective annual yield to the nearest thousandth of a percent?

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A)0.0079%
B)0.798%
C)7.713%
D)8.098%
5
Khira Rable invests $3,000 in a certificate of deposit for 2 years. The certificate earns interest at an annual rate of 2.5% compounded quarterly. What is the annual percentage yield to the nearest thousandth of a percent?

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A)0.025%
B)2.5%
C)2.523%
D)2.712%
6
Mary Beth Healy purchased 50 shares of stock at $23.50 per share. Her Internet online broker charged her a $14.95 commission. What is the total amount that she paid for the stock?
A)$427.50
B)$747.50
C)$1,175.00
D)$1,189.95
7
Dante Flores bought 1,200 shares of Metro Health Care REIT at $84.36 per share. The broker's commission was $14.95 for fewer than 1,000 shares or $0.015 per share for 1,000 or more. What was the total Dante paid?
A)$101,232.00
B)$101,246.95
C)$101,249.95
D)$101,250.00
8
Aisha Knox paid a total of $1,500 for 75 shares of stock. He sold the stock for $22.50 a share and paid a sales commission of $49.00. What is the profit or loss from the sale?
A)$138.50 loss
B)$138.50 profit
C)$236.50 loss
D)$236.50 profit
9
Kylee and Mikel Peterson paid a total of $1,930.95 for 80 shares of TRE stock. They sold the stock for $28.95 per share and paid a sales commission of $39.95. What is the profit or loss from the sale?
A)$345.10 loss
B)$345.10 profit
C)$425.00 loss
D)$425 profit
10
Geoffrey Richards bought 100 shares of stock at $32 per share. The company paid annual dividends of $0.74 per share. What is the annual yield to the nearest hundredth of a percent?
A)2.31%
B)3.20%
C)4.32%
D)7.40%
11
ALGEBRA Jimmy and Jessica Fouty own 250 shares of Yoder Mills stock. After the quarterly dividends are reinvested under their dividend reinvestment program (DRIP), they own 253 shares. Yoder Mills is selling at $62 a share. Find the annual dividend per share.
A)$0.05
B)$0.74
C)$2.98
D)$3.01
12
Elena Winston invested $30,000 in the Jennison Dryden Utility Mutual Fund. The net asset value is $16.18 per share. The fund is front loaded with a loading rate of 4.25%. How many shares did Elena buy?
A)1,854 shares
B)1,775 shares
C)1,240 shares
D)79 shares
13
The Hamptons invested $23,495 in the Franklin Templeton "B" Mutual Fund. The net asset value of the fund at the time of purchase was $12.70 and was back-loaded, with a loading rate of 4.25%. When the Hamptons sold their fund shares, the net asset value was $13.30. Considering the back-end load, how much profit or loss did the Hamptons make on their investment?
A)$64.29 profit
B)$64.29 loss
C)$276.90 profit
D)$276.90 loss
14
Claire Hofbauer purchased $1,500 bond at the quoted price of 87 ½. The bond paid interest at a rate of 5.5%. Find the annual yield to the nearest hundredth of a percent.
A)5.50%
B)6.29%
C)15.91%
D)17.14%
15
Nelson Connors purchased a $2,500 bond at the quoted price of 89 ½. The bond paid interest at a rate of 6.5%. Find the annual yield to the nearest hundredth of a percent.
A)7.26%
B)7.78%
C)8.45%
D)10.50%
16
Jamal Anderson purchased an older, two-bedroom, one-bath home for $95,600. He made a $28,680 down payment and mortgaged the rest. His annual expenses for mortgage interest, taxes, repairs, insurance, and depreciation totaled $7,900. Jamal rented the house for $800 a month. What is the annual net income?
A)$1,700
B)$2,200
C)$12,450
D)$20,780
17
Elizabeth Houston bought a vacation condominium as a real estate rental property for $325,900. After a $100,000 down payment, she mortgaged the rest. Her annual expenses totaled $26,720 and she rented the condo for $2,350 per month. What is the annual yield?
A)1.48%
B)1.96%
C)2.21%
D)4.20%
18
Rory Usman had saved $1,500 per year in his IRA for 35 years. At age 70, the fair market value of his IRA was $205,690.90. Using the uniform life-time table, what is his required minimum distribution?

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A)$7,506.97
B)$7,761.92
C)$8,034.80
D)$9,349.59
19
Use the table from problem 19. Ana McAdams started contributing $3,000 per year to her IRA at age 25. Her fair market value is now $812,349.21. She is now 75 years of age. What penalty would she incur if she failed to take the required minimum distribution?
A)$12,345.90
B)$17,736.88
C)$35,473.76
D)$42,120.12
20
Reba Andreassen purchased 1,275 shares of stock at $11.55 per share. The broker's commission was $19.95 for fewer than 1,500 shares or $0.015 per share for 1,500 or more. What was the total Reba paid?
A)$14,711.30
B)$14,726.25
C)$14,745.38
D)$14,746.20
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