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problem1: You have $10,000 to invest. You do not want to take any risk, so you will put the funds in a savings account at the local bank. Of the following choices, which one will produce the largest sum at the end of 22 years?

[A] An account that compounds interest quarterly.

[B] An account that compounds interest monthly.

[C] An account that compounds interest annually.

[D] An account that compounds interest daily.

problem2: If there is a 20 percent chance we will get a 16 percent return, a 30 percent chance of getting a 14 percent return, a 40 percent chance of getting a 12 percent return, and a 10 percent chance of getting an 8 percent return, what is the expected rate of return?

[A] 14%

[B] 15%

[C] 12%

[D] 13%

problem3: Which of the following statements is true about time value of money?

[A] The future value of a single sum will be greater if funds earn 12% instead of 6%.

[B] The future value of a single sum will be unaffected by the length of time funds are invested.

[C] The future value of a single sum will be greater if funds earn 5% instead of 10%.

[D] The future value of a single sum will be unaffected by the rate of return at which funds grow.

problem4: If you hold a portfolio made up of the following stocks: Investment Value Beta Stock A $2,000 1.5 Stock B $5,000 1.2 Stock C $3,000 0.8 find out the beta of the portfolio?

[A] 1.32

[B] 1.17

[C] 1.14

[D] Can't be determined from information given.

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  • Category:- Basic Finance
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