Question 1 - A man has a 30-year loan with level end of year payments. The principal repaid in year 5 is 159.68 and in year 10 is 213.73. What is the payment?

a. 726

b. 415

c. 525

d. 975

e. 835

Question 2 - A 10,000 par value 10-year bond with 8% annual coupons is bought at a premium to yield an annual effective rate of 6%. Calculate the interest portion of the 7-th coupon.

a. 632

b. 652

c. 642

d. 622

e. 662

Question 3 - Jack deposits 1000 into a saving account. For the first 5 years the money accumulates with a force of interest delta=0.04. For the next 3 years the money accumulates at a nominal discount rate of 6% convertible semiannually. At the end of 10 years the money has earned at an annually effective rate of 5.2%. What was the nominal interest rate convertible quarterly for the last 2 years?

a. 5.2%

b. 5.8%

c. 5.5%

d. 6.0%

e. 6.3%

Question 4 - A 10-year loan of 3000 is to be repaid with payments at the end of each year. It can be repaid under the following two options: (i) Equal annual payments at an annual effective rate of 8.00%. (ii) Installments of 300 each year plus interest on the unpaid balance at an annual effective rate of i.

The sum of the payments under option (i) equals the sum of the payments under option (ii). Determine i.

a. 8.90%

b. 9.65%

c. 9.20%

d. 8.55%

e. 9.40%

Question 5 - John borrows 10,000 for 10 years at an annual effective interest rate of 8%. He can repay this loan using the amortization method with payments of 1,600.00 at the end of each year. Instead, John repays the 10,000 using a sinking fund that pays an annual effective interest rate of 10%. The deposits to the sinking fund are equal to 1,600.00 minus the interest on the loan and are made at the end of each year for 10 years.

Determine the balance in the sinking fund immediately after repayment of the loan.

a. 2430

b. 2130

c. 2870

d. 2380

e.2750

Question 6 - A 20-year annuity immediate pays 100 the first year and increases by 100 a year through year 10. Starting in year 11 each yearly payment is 5% greater than the previous payment. The annuity earns 6.8% annually. What is the present value of this annuity?

a. 8395

b. 8290

c. 8350

d. 8175

e. 8239

Question 7 - For the first two years the annual effective interest rate is 6%. Then for t > 2 the force of interest is 1/(1+t), where t is the number of years from today. Calculate the effective annual discount rate over the 5 years.

1. 0.12

2. 0.15

3. 0.18

4. 0.21

5. 0.24

Question 8 - A man buys a house for with a 30-year 6.4% monthly payment mortgage for 150,000. After 12 years he refinances the house at a new rate of 5.8% and a new term of 10 years. What are his new monthly payments?

a. 1330

b. 1322

c. 1346

d. 1354

e. 1338

Question 9 - $100, 000 loan is made Monthly interest-only repayments are made for 10 years, the first repayment occurring one month from today Level annual repayments of $9,456 are made for as long as needed to pay off the remaining balance of the loan, where the first annual repayment is made at the end of Year 11. The annual effective interest rate is 9.2% Calculate the total number of repayments necessary to pay off the loan.

1. 133

2. 140

3. 147

4. 154

5. 161

Question 10 - Emily purchased a 10-year par value bond with semiannual coupons at a nominal annual rate of 4% convertible semiannually at a price of 1050. The bond can be called at par value X on any coupon date starting at the end of year 5. The price guarantees that Emily will receive a nominal annual rate of interest convertible semiannually of at least 6%. Calculate X.

a. 1234

b. 1264

c. 1294

d. 1284

e. 2024

Question 11 - 100 is deposited into an investment account on Jan. 1, 2005. You are given the following information on investment activity that takes place during the year.

The amount in the account on Jan 1, 2006 is 130. During 2005, the dollar-weighted return is 0% and the time-weighted return is k. Calculate k.

a. 1.25%

b. 0.0%

c. -1.95%

d. -2.25%

e. -1.25%

Question 12 - At the beginning of the year, an investment fund was established with an initial deposit of 1000. A new deposit of 600 was made at the end of 4 months. Withdrawals of 200 and 300 were made at the end of 6 months and 8 months, respectively. The amount in the fund at the end of the year is 1650. Calculate the dollar-weighted (money-weighted) yield rate earned by the fund during the year.

a. 41.40%

b. 30.20%

c. 36.61%

d. 45.83%

e. 27.57%

Question 13 - Mike buys a 10-year 1000 par bond with 7.0% semi-annual coupons. The coupon payments are deposited into an account that pays 6.6% convertible semi-annually. After the 10th deposit the bank drops its rate to 5.8% convertible semi-annually. At the end of the 10 years period what is her annual yield for this investment?

a. 7.1%

b. 7.3%

c. 6.9%

d. 6.5%

e. 6.7%

Question 14 - A 1000 par value bond with coupons at 8% payable semiannually was called for 1100 prior to maturity. The bond was bought for 920 immediately after a coupon payment and was held to call. The nominal yield rate convertible semiannually was 10%. Calculate the number of years the bond was held.

a. 6.4

b. 5.4

c. 15.4

d. 12.4

e. 9.4

Question 15 - John purchased a 20-year par value bond with semiannual coupons at a nominal annual rate of 10% convertible semiannually at a price of 1700.00. The bond can be called at par value 1100 on any coupon date starting at the end of year 15. What is the minimum yield that John could receive, expressed as a nominal annual rate of interest convertible semiannually?

a. 6.11%

b. 4.25%

c. 5.75%

d. 4.84%

e. 5.32%

Question 16 - Peter buys a house for 150,000 with a mortgage rate of 5.8% convertible monthly. At the time of purchase he owns a 10,000 20-year zero coupon bond that earns 4.5% annually. The bond matures in 15 years. He would like to use the proceeds from the bond to make a payment larger than the usual fixed rate payment and pay off the balance of the mortgage after the 180th payment. How much should his monthly payments be?

a. 1242

b. 1197

c. 1214

d. 1145

e. 1173

Question 17 - A loan is being repaid with 30 annual payments of 300 each. With the 10th payment, the borrower pays an extra 1000, and then repays the balance over 10 years with a revised annual payment. The effective rate of interest is 8%. Calculate the amount of the revised annual payment.

a. 357

b. 290

c. 383

d. 335

e. 305

Question 18 - Mary buys a 30-year annuity-immediate with monthly l payments that earns 5.4% convertible monthly. The present value of the annuity is 10,000. At the end of 15 years the interest rate is increased to 6.3% convertible monthly. What will be her new monthly payments be?

a. 58.00

b. 59.50

c. 57.50

d. 59.00

e. 58.50