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Customer Question

(Points: 2)...

1. The primary form used in a checking account is a check register. (Points: 2)

True

False

2. The person who signs a check on the back is the maker (Points: 2)

True

False

3. When completing a check stub, to arrive at the ending balance, take the beginning balance and: (Points: 2)

add the deposit and the check

subtract the check and add the deposit

subtract the check and the deposit

add the check and subtract the deposit

all of the above

4. Before a check can be deposited or cashed, it must be: (Points: 2)

approved

verified

restricted

endorsed

none of the above

5. Writing the words "For Deposit Only" along with your checking account number on the back of a check is called a: (Points: 2)

qualified endorsement

restricted endorsement

pure endorsement

simple endorsement

all of the above

6. The checkbook should be credited when a memorandum for which of the following is received? (Points: 2)

interest earned

service charge

NSF

overdraft charge

none of the above

7. When reconciling the bank statement, outstanding deposits are: (Points: 2)

subtracted from the bank statement

added to the checkbook

subtracted from the checkbook

added to the bank statement

none of the above

8. The bank statement for Burton Co. revealed a balance of $1,475.00 while the checkbook balance showed a balance of $1,822.00. Outstanding checks totaled $185.00. A check printing charge of $35.00 appeared on the bank statement. There was a $76.00 NSF check reported on the bank's statement. A deposit in the amount of $735.00 was not yet credited. What was Burton Co.'s reconciled balance? (Points: 2)

$1,390.00

$1,475.00

$1,087.00

$2,125.00

none of the above

9. William received his bank statement from Trader's Bank indicating an ending balance of $6,206.55. William's checkbook showed a balance of $5,549.30. William noticed that $759.00 in checks were outstanding. The bank statement reflected an NSF charge in the amount of $86.75 and a monthly service charge of $15.00. The reconciled balance was: (Points: 2)

$5,549.30

$6,206.55

$5,447.55

$5,477.55

none of the above

10. The December 31 checkbook balance of the Advance Co. was $5,691.99. The ending bank statement balance was $4,890.18. Checks in the amount of $691.50 were outstanding. The statement failed to reflect a deposit in the amount of $1,433.84. The monthly service charge was $37.65. The bank paid interest on their average balance in the amount of $30.79. It was discovered that the bookkeeper had failed to record a check in the amount of $52.61. The reconciled balance was: (Points: 2)

$5,632.52

$5,632.25

$6,532.52

$5,623.52

none of the above

11. An outstanding check included in this month's bank statement, from a previous month's bank reconciliation, should be: (Points: 2)

deducted from the book balance of cash

ignored

added to the bank statement balance of cash

deducted from the bank statement balance of cash

added to the book balance of cash

12. Deposits that appear on your records, but not on the bank statement, are known as: (Points: 2)

ATM

outstanding

NSF

in transit

none of the above

13. The term AB means to multiply A by B. (Points: 2)

True

False

14. In the equation B - 11 = 27, B = 16. (Points: 2)

True

False

15. In solving the equation B/6 = 35, you would divide both sides of the equation by 6. (Points: 2)

True

False

16. When solving an equation, you should attempt to isolate the unknown on the right side and the numbers/symbols on the left side. (Points: 2)

True

False

17. Variables are represented by the letters. (Points: 2)

True

False

18. A letter or symbol that represents one or more unknown values is a(n): (Points: 2)

equation

constant

variable

known

none of the above

19. In the equation B + 127 = 52, B equals? (Points: 2)

179

-179

-75

27

20. Any statement that uses an equal sign is called a(n): (Points: 2)

unknown quantity

equation

symbol

variable

none of the above

21. If an equation indicates addition in its presentation, in order to solve for the unknown you must: (Points: 2)

multiply

add

divide

subtract

none of the above

22. If a parenthetic expression is a part of an equation, you remove the parenthesis by ________ each term within the parenthesis by the number to the left of the parenthesis. (Points: 2)

adding

dividing

multiplying

subtracting

none of the above

23. In the equation A/9 + 7 = 15, A equals: (Points: 2)

24

27

22

72

none of the above

24. In the equation K + 6K -13 = 57, K is equal to: (Points: 2)

13

10

17

57

none of the above

25. An equation is: (Points: 2)

an expression of a mathematical inequality

a mathematical unknown

a mathematical statement of equality

none of the above

26. The mean is a form of measurement for central tendency. (Points: 2)

True

False

27. On a bar graph, the bars are always vertical. (Points: 2)

True

False

28. In a circle graph, the circle itself represents 100% and each section of the circle illustrates a part of the total quantity. (Points: 2)

True

False

29. To find the standard deviation you only need to know the mode. (Points: 2)

True

False

30. What is the median of 32, 32, 37, 39, 40, 44, and 48? (Points: 2)

39

38.9

272

32

None of the above

31. 18% of a circle graph is shown by a section of: (Points: 2)

18 degrees

48 degrees

64.8 degrees

36 degrees

None of the above

32. . Find the standard deviation of the following homework scores: 68, 76, 76, 78, 86, 87, 88, and 93. (Points: 2)

466

82

77.667

8.28

None of the above

33. A good statistical indicator to avoid the distortion of extreme values is the: (Points: 2)

Mean

Median

Weighted mean

mode

All of the above

34. The middle value in a series of numbers arranged in order from smallest to largest is the : (Points: 2)

Mean

Range

Median

Mode

None of the above

35. Which of the following statement is incorrect? (Points: 2)

The line graph and bar graph are identical.

Using only the statistical mean could result in distortions.

The mode is a statistical measurement that records value that occurs the most in a data set.

None of the above

36. The median of 105, 108, 117, 122, 129, and 129 is: (Points: 2)

117

119.5

129

122

None of the above

37. The mode of 105, 100, 79, 86, 101, 94, 98, 87, and 83 is: (Points: 2)

94

26

92.56

96

None of the above

38. The pay period intervals biweekly and semimonthly are similar in that the same number of pay periods occur in either method. (Points: 2)

True

False

39. A salaried employee is paid the same amount of money even though the hours worked may vary from pay period to pay period. (Points: 2)

True

False

40. Carrie Blue earns a salary of $26,480.00 per year. If Carrie is paid biweekly, her gross paycheck would be $1,190.00. (Points: 2)

True

False

41. Gross wages = days worked × rate per hour. (Points: 2)

True

False

42. The percent of social security tax charged and the amount of salary subject to the tax can change from year to year. (Points: 2)

True

False

43. Employee contributions to medicare are limited on an annual basis. (Points: 2)

True

False

44. Wages that are not taxable are referred to as "exempt wages." (Points: 2)

True

False

45. A variable commission scale is normally based on: (Points: 2)

gross sales

a different commission for different levels of sales

fixed commission rates

a fixed level of sales

none of the above

46. Samson Corporation pays its employees on a graduated commission scale: 5% on the first $50,000 of sales, 5.5% on sales above $50,000.00 to $75,000.00, and 6% on sales over $75,000.00. Gary's total sales for the fourth quarter were $192,500.00. What was Gary's commission? (Points: 2)

$4,520.00

$19,025.00

$10,925.00

$9,250.00

47. Patrick is an automobile salesman who receives a salary of $550.00 per week plus a commission of 5 percent on all sales. During a 4-week period he sold $49,500.00 worth of cars. What were Patrick's average earnings? (Points: 2)

$872.90

$550.00

$1,550.00

$1,168.75

none of the above

48. Social security and medicare are: (Points: 2)

calculated based upon the W-4 form

only paid by the employer

withheld from the employee's paycheck and matched by the employer

only paid by the employee

none of the above

49. The amount of federal income tax to be withheld from employee's paychecks can be calculated by: (Points: 2)

either the percentage method or the wage-bracket table method

the percentage-bracket method

only by the percentage method

only by the wage-bracket method

none of the above

50. The withholding of 7.65% of the first $87,900 of earnings in a year includes: (Points: 2)

medicaid tax

medicare tax

social security and medicare tax

social security tax

none of the above

51. The amount of money borrowed or invested is called the maturity value. (Points: 2)

True

False

52. The interest paid on a $10,000.00 loan for 2 years at 13.5% interest is $1,250.00. (Points: 2)

True

False

53. The formula to find the rate is interest divided by (principal times time). (Points: 2)

True

False

54. 8% for 45 days is equal to 0.01. (Points: 2)

True

False

55. The cash price of an item is the amount you would have paid if the full amount was paid at the time of purchase. (Points: 2)

True

False

56. To find the total cost of a purchase, multiply the amount of each payment by the number of payments in the loan and then add the: (Points: 2)

down payment

amount financed

finance charge

installment payment

none of the above

57. The amount of a loan is: (Points: 2)

the installment price + interest - down payment

installment price - interest - down payment

installment price - interest + down payment

installment price - payments + purchases

none of the above

58. John purchased a new boat for $24,600.00. He put a $5,400.00 down payment on it. The bank's loan was for 60 months. Finance charges totaled $6,400.00. His monthly payment was: (Points: 2)

$106.67

$410.00

$250.00

$426.67

none of the above

59. A fraction that shows what portion of the total finance charge has not been paid at the time a loan is paid off is called the: (Points: 2)

finance rebate

refund fraction

pay-off ratio

constant ratio

none of the above

60. The maturity value of a simple discounted note in the amount of $4,850.00 at 10% for 70 days is: (Points: 2)

$4,850.00

$4,944.31

$4,755.69

$4,943.01

none of the above

61. The proceeds of a $7,500.00, 10% simple discounted note for 85 days is: (Points: 2)

$7,674.66

$7,322.92

$7,677.08

$7,325.34

none of the above

62. The method used to calculate interest that is sometimes known as the Banker's Rule is: (Points: 2)

exact interest using exact time

exact interest using ordinary time

ordinary interest using ordinary time

ordinary interest using exact time

none of the above

63. The terms of a loan indicate how often interest is compounded. (Points: 2)

True

False

64. A compound interest table shows the compounded amount per dollar of principal. (Points: 2)

True

False

65. To compound daily means to compound 360 times a year. (Points: 2)

True

False

66. The term "nominal rate" means the same as "true rate." (Points: 2)

True

False

67. The effective rate is: (Points: 2)

the stated rate

the nominal rate

the true semiannual rate

the true annual rate

none of the above

68. $15,000.00 for 10 years compounded at 10% quarterly results in how many periods? (Points: 2)

120

20

10

40

none of the above

69. In a loan of 8% compounded quarterly, what is the periodic interest (Points: 2)

2.5%

6%

2%

4%

70. Present value does not: (Points: 2)

find the present dollar amount

use the tables

know the present dollar amount

know the future value

none of the above

71. $25,000.00 for 15 years compounded at 10% quarterly results in a periodic interest rate of: (Points: 2)

10%

7%

5%

2.5%

none of the above

72. The effective rate is: (Points: 2)

the interest for one year divided by the principal

the interest for one year divided by the principal for three years

the interest for one year divided by the annual rate

never related to the compound table

none of the above

73. Josh is having difficulty deciding whether to put his savings in the Mercantile Bank or the Boatmen's Bank. Mercantile offers a 10% rate compounded quarterly while Boatmen's offers 12% compounded semiannually. Josh has $40,000.00 to invest and expects to withdraw the money at the end of 5 years. (Use Table 10-1 from the textbook.) The best deal is: (Points: 2)

Mercantile Bank

Mercantile Bank for the last two years

Boatmen's Bank for the first two years

Boatmen's Bank

none of the above

74. Don deposited $27,500.00 in Trader's Bank at an interest rate of 12% compounded quarterly. (Use Table 10-1 from the textbook.) The effective rate was: (Points: 2)

12.55%

12%

13%

14.0%

none of the above

75. Lisa wants to attend the University of Colorado. She will need to have $80,000.00 five years from today. Lisa is wondering what she will have to put in the bank today so she will have $80,000.00 in five years. Her bank pays 10% compounded quarterly. By using Table 10-3 in the textbook, the amount Lisa will need to deposit is: (Points: 2)

$48,281.68

$49,113.60

$48,821.60

$49,113.06

none of the above

76. The monthly payment of rent is an example of a renter's annuity. (Points: 2)

True

False

77. A contingent annuity has a specific number of payment periods. (Points: 2)

True

False

78. With an annuity due no interest is paid in the first period. (Points: 2)

True

False

79. The amount of an $8,000.00, 10%, 5 year ordinary annuity compounded semiannually is $100,624. (Points: 2)

True

False

80. The maturity value of a transaction is equal to the principal plus the rate. (Points: 2)

True

False

81. John owns five health food stores in the Columbia area, and they are realizing a good profit. John decides to invest a portion of the profits in an annuity offered by Penn Life Insurance. Penn Life will guarantee John 8% interest compounded quarterly for the first 5 years, as long as he deposits $10,000.00 every quarter of the term of the guaranteed rate. Assuming John fulfills the obligations of the investment, what will be the value of the investment at the end of the 5 year term? (Points: 2)

$261,832.74

$245,446.58

$242,970.00

$255,446.40

none of the above

82. The sum of the payments of an annuity plus the interest is called the: (Points: 2)

economic sum

amount of the annuity

financial total

payoff amount

none of the above

83. An annuity without a specific number of payment periods is termed a(n): (Points: 2)

non-standard annuity

annual annuity

annuity certain

contingent annuity

none of the above

84. Nancy plays drums in a dance band on weekends in addition to her full-time job at the local junior college. Nancy decided on her 35th birthday to establish her own retirement savings account by investing $2,400.00 of her weekend earnings every six months into an ordinary annuity paying 12% interest compounded semiannually. If Nancy makes these regular deposits until her 65th birthday, how much will this retirement account be worth? (Points: 2)

$1,297,503.10

$1,281,903.10

$1,297,503.01

$1,279,507.20

none of the above

85. Derek established his own retirement account ten years ago. He has discovered that he can obtain a better rate for the next 10 years at 12% interest compounded semiannually. Consequently, Derek established a new ordinary annuity account (beginning amount $0.00) and he will contribute $7,000.00 semiannually into the account for the next 10 years. What will be the value of this account at the end of the 10 year period? (Points: 2)

$244,707.61

$83,652.59

$264,501.86

$257,502.00

none of the above

86. The table factor for an annuity due of 4% compounded semiannually for 4 years is: (Points: 2)

8.923740

7.436704

2.981042

8.582961

none of the above

87. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is: (Points: 2)

$139,269.60

$23,296.60

$116,000.00

$23,269.60

None of the above

88. A point is 1 percent of the amount of the loan. (Points: 2)

True

False

89. A mortgage of $80,000.00 with 2 points means the borrower must pay $800.00 at the loan closing. (Points: 2)

True

False

90. Not all mortgages are paid on a monthly basis. (Points: 2)

True

False

91. Amortization is not a payment process. (Points: 2)

True

False

92. The primary mortgage on a home is called the: (Points: 2)

first mortgage

collateral

FNMA

real mortgage

none of the above

93. Points represent: (Points: 2)

monthly payments

an additional cost of financing

2 percent of the amount borrowed

a 3 percent up front payment

none of the above

94. Donald purchased a home for $250,000.00. He put down 25 percent of the purchase price. The mortgage was at a rate of 5.50% for 30 years. By using Table 12-1 in the textbook, what were his monthly payments? (Points: 2)

$1,056.00

$1,240.00

$1,065.00

$1,420.00

none of the above

95. Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at the closing. The points amounted to: (Points: 2)

$5,000.00

$2,500.00

$750.00

$7,500.00

none of the above

96. "One point" represents: (Points: 2)

1 percent of the amount borrowed.

1 payment per month.

1 additional percent for every $10,000 borrowed.

1 percent per month additional charge.

none of the above

97. The repayment of a loan in equal installments that are applied to principal and interest over a specific period of time is called: (Points: 2)

amortization

adjustable rate mortgage

conventional mortgage

constant mortgage

none of the above

98. An amortization schedule shows the: (Points: 2)

payment broken down into principal and interest

increase in the principal

balance of interest outstanding

increase in the loan outstanding

none of the above

99. Chuck purchased a home in Texas for $240,000.00. He made a down payment of 20 percent and obtained a mortgage for 25 years at 6%. What amount of his first payment of $1,236.48 applied to interest? (Points: 2)

$276.48

$1,236.48

$960.00

$136.00

none of the above

100. The difference between the monthly payments on a $95,000.00 mortgage at 5% versus 6% for 25 years is: (Use Table 12-1 in the textbook.) (Points: 2)

$56.05

$65.05

$56.50

$56.60

none of the above

________________________________________

True

False

2. The person who signs a check on the back is the maker (Points: 2)

True

False

3. When completing a check stub, to arrive at the ending balance, take the beginning balance and: (Points: 2)

add the deposit and the check

subtract the check and add the deposit

subtract the check and the deposit

add the check and subtract the deposit

all of the above

4. Before a check can be deposited or cashed, it must be: (Points: 2)

approved

verified

restricted

endorsed

none of the above

5. Writing the words "For Deposit Only" along with your checking account number on the back of a check is called a: (Points: 2)

qualified endorsement

restricted endorsement

pure endorsement

simple endorsement

all of the above

6. The checkbook should be credited when a memorandum for which of the following is received? (Points: 2)

interest earned

service charge

NSF

overdraft charge

none of the above

7. When reconciling the bank statement, outstanding deposits are: (Points: 2)

subtracted from the bank statement

added to the checkbook

subtracted from the checkbook

added to the bank statement

none of the above

8. The bank statement for Burton Co. revealed a balance of $1,475.00 while the checkbook balance showed a balance of $1,822.00. Outstanding checks totaled $185.00. A check printing charge of $35.00 appeared on the bank statement. There was a $76.00 NSF check reported on the bank's statement. A deposit in the amount of $735.00 was not yet credited. What was Burton Co.'s reconciled balance? (Points: 2)

$1,390.00

$1,475.00

$1,087.00

$2,125.00

none of the above

9. William received his bank statement from Trader's Bank indicating an ending balance of $6,206.55. William's checkbook showed a balance of $5,549.30. William noticed that $759.00 in checks were outstanding. The bank statement reflected an NSF charge in the amount of $86.75 and a monthly service charge of $15.00. The reconciled balance was: (Points: 2)

$5,549.30

$6,206.55

$5,447.55

$5,477.55

none of the above

10. The December 31 checkbook balance of the Advance Co. was $5,691.99. The ending bank statement balance was $4,890.18. Checks in the amount of $691.50 were outstanding. The statement failed to reflect a deposit in the amount of $1,433.84. The monthly service charge was $37.65. The bank paid interest on their average balance in the amount of $30.79. It was discovered that the bookkeeper had failed to record a check in the amount of $52.61. The reconciled balance was: (Points: 2)

$5,632.52

$5,632.25

$6,532.52

$5,623.52

none of the above

11. An outstanding check included in this month's bank statement, from a previous month's bank reconciliation, should be: (Points: 2)

deducted from the book balance of cash

ignored

added to the bank statement balance of cash

deducted from the bank statement balance of cash

added to the book balance of cash

12. Deposits that appear on your records, but not on the bank statement, are known as: (Points: 2)

ATM

outstanding

NSF

in transit

none of the above

13. The term AB means to multiply A by B. (Points: 2)

True

False

14. In the equation B - 11 = 27, B = 16. (Points: 2)

True

False

15. In solving the equation B/6 = 35, you would divide both sides of the equation by 6. (Points: 2)

True

False

16. When solving an equation, you should attempt to isolate the unknown on the right side and the numbers/symbols on the left side. (Points: 2)

True

False

17. Variables are represented by the letters. (Points: 2)

True

False

18. A letter or symbol that represents one or more unknown values is a(n): (Points: 2)

equation

constant

variable

known

none of the above

19. In the equation B + 127 = 52, B equals? (Points: 2)

179

-179

-75

27

20. Any statement that uses an equal sign is called a(n): (Points: 2)

unknown quantity

equation

symbol

variable

none of the above

21. If an equation indicates addition in its presentation, in order to solve for the unknown you must: (Points: 2)

multiply

add

divide

subtract

none of the above

22. If a parenthetic expression is a part of an equation, you remove the parenthesis by ________ each term within the parenthesis by the number to the left of the parenthesis. (Points: 2)

adding

dividing

multiplying

subtracting

none of the above

23. In the equation A/9 + 7 = 15, A equals: (Points: 2)

24

27

22

72

none of the above

24. In the equation K + 6K -13 = 57, K is equal to: (Points: 2)

13

10

17

57

none of the above

25. An equation is: (Points: 2)

an expression of a mathematical inequality

a mathematical unknown

a mathematical statement of equality

none of the above

26. The mean is a form of measurement for central tendency. (Points: 2)

True

False

27. On a bar graph, the bars are always vertical. (Points: 2)

True

False

28. In a circle graph, the circle itself represents 100% and each section of the circle illustrates a part of the total quantity. (Points: 2)

True

False

29. To find the standard deviation you only need to know the mode. (Points: 2)

True

False

30. What is the median of 32, 32, 37, 39, 40, 44, and 48? (Points: 2)

39

38.9

272

32

None of the above

31. 18% of a circle graph is shown by a section of: (Points: 2)

18 degrees

48 degrees

64.8 degrees

36 degrees

None of the above

32. . Find the standard deviation of the following homework scores: 68, 76, 76, 78, 86, 87, 88, and 93. (Points: 2)

466

82

77.667

8.28

None of the above

33. A good statistical indicator to avoid the distortion of extreme values is the: (Points: 2)

Mean

Median

Weighted mean

mode

All of the above

34. The middle value in a series of numbers arranged in order from smallest to largest is the : (Points: 2)

Mean

Range

Median

Mode

None of the above

35. Which of the following statement is incorrect? (Points: 2)

The line graph and bar graph are identical.

Using only the statistical mean could result in distortions.

The mode is a statistical measurement that records value that occurs the most in a data set.

None of the above

36. The median of 105, 108, 117, 122, 129, and 129 is: (Points: 2)

117

119.5

129

122

None of the above

37. The mode of 105, 100, 79, 86, 101, 94, 98, 87, and 83 is: (Points: 2)

94

26

92.56

96

None of the above

38. The pay period intervals biweekly and semimonthly are similar in that the same number of pay periods occur in either method. (Points: 2)

True

False

39. A salaried employee is paid the same amount of money even though the hours worked may vary from pay period to pay period. (Points: 2)

True

False

40. Carrie Blue earns a salary of $26,480.00 per year. If Carrie is paid biweekly, her gross paycheck would be $1,190.00. (Points: 2)

True

False

41. Gross wages = days worked × rate per hour. (Points: 2)

True

False

42. The percent of social security tax charged and the amount of salary subject to the tax can change from year to year. (Points: 2)

True

False

43. Employee contributions to medicare are limited on an annual basis. (Points: 2)

True

False

44. Wages that are not taxable are referred to as "exempt wages." (Points: 2)

True

False

45. A variable commission scale is normally based on: (Points: 2)

gross sales

a different commission for different levels of sales

fixed commission rates

a fixed level of sales

none of the above

46. Samson Corporation pays its employees on a graduated commission scale: 5% on the first $50,000 of sales, 5.5% on sales above $50,000.00 to $75,000.00, and 6% on sales over $75,000.00. Gary's total sales for the fourth quarter were $192,500.00. What was Gary's commission? (Points: 2)

$4,520.00

$19,025.00

$10,925.00

$9,250.00

47. Patrick is an automobile salesman who receives a salary of $550.00 per week plus a commission of 5 percent on all sales. During a 4-week period he sold $49,500.00 worth of cars. What were Patrick's average earnings? (Points: 2)

$872.90

$550.00

$1,550.00

$1,168.75

none of the above

48. Social security and medicare are: (Points: 2)

calculated based upon the W-4 form

only paid by the employer

withheld from the employee's paycheck and matched by the employer

only paid by the employee

none of the above

49. The amount of federal income tax to be withheld from employee's paychecks can be calculated by: (Points: 2)

either the percentage method or the wage-bracket table method

the percentage-bracket method

only by the percentage method

only by the wage-bracket method

none of the above

50. The withholding of 7.65% of the first $87,900 of earnings in a year includes: (Points: 2)

medicaid tax

medicare tax

social security and medicare tax

social security tax

none of the above

51. The amount of money borrowed or invested is called the maturity value. (Points: 2)

True

False

52. The interest paid on a $10,000.00 loan for 2 years at 13.5% interest is $1,250.00. (Points: 2)

True

False

53. The formula to find the rate is interest divided by (principal times time). (Points: 2)

True

False

54. 8% for 45 days is equal to 0.01. (Points: 2)

True

False

55. The cash price of an item is the amount you would have paid if the full amount was paid at the time of purchase. (Points: 2)

True

False

56. To find the total cost of a purchase, multiply the amount of each payment by the number of payments in the loan and then add the: (Points: 2)

down payment

amount financed

finance charge

installment payment

none of the above

57. The amount of a loan is: (Points: 2)

the installment price + interest - down payment

installment price - interest - down payment

installment price - interest + down payment

installment price - payments + purchases

none of the above

58. John purchased a new boat for $24,600.00. He put a $5,400.00 down payment on it. The bank's loan was for 60 months. Finance charges totaled $6,400.00. His monthly payment was: (Points: 2)

$106.67

$410.00

$250.00

$426.67

none of the above

59. A fraction that shows what portion of the total finance charge has not been paid at the time a loan is paid off is called the: (Points: 2)

finance rebate

refund fraction

pay-off ratio

constant ratio

none of the above

60. The maturity value of a simple discounted note in the amount of $4,850.00 at 10% for 70 days is: (Points: 2)

$4,850.00

$4,944.31

$4,755.69

$4,943.01

none of the above

61. The proceeds of a $7,500.00, 10% simple discounted note for 85 days is: (Points: 2)

$7,674.66

$7,322.92

$7,677.08

$7,325.34

none of the above

62. The method used to calculate interest that is sometimes known as the Banker's Rule is: (Points: 2)

exact interest using exact time

exact interest using ordinary time

ordinary interest using ordinary time

ordinary interest using exact time

none of the above

63. The terms of a loan indicate how often interest is compounded. (Points: 2)

True

False

64. A compound interest table shows the compounded amount per dollar of principal. (Points: 2)

True

False

65. To compound daily means to compound 360 times a year. (Points: 2)

True

False

66. The term "nominal rate" means the same as "true rate." (Points: 2)

True

False

67. The effective rate is: (Points: 2)

the stated rate

the nominal rate

the true semiannual rate

the true annual rate

none of the above

68. $15,000.00 for 10 years compounded at 10% quarterly results in how many periods? (Points: 2)

120

20

10

40

none of the above

69. In a loan of 8% compounded quarterly, what is the periodic interest (Points: 2)

2.5%

6%

2%

4%

70. Present value does not: (Points: 2)

find the present dollar amount

use the tables

know the present dollar amount

know the future value

none of the above

71. $25,000.00 for 15 years compounded at 10% quarterly results in a periodic interest rate of: (Points: 2)

10%

7%

5%

2.5%

none of the above

72. The effective rate is: (Points: 2)

the interest for one year divided by the principal

the interest for one year divided by the principal for three years

the interest for one year divided by the annual rate

never related to the compound table

none of the above

73. Josh is having difficulty deciding whether to put his savings in the Mercantile Bank or the Boatmen's Bank. Mercantile offers a 10% rate compounded quarterly while Boatmen's offers 12% compounded semiannually. Josh has $40,000.00 to invest and expects to withdraw the money at the end of 5 years. (Use Table 10-1 from the textbook.) The best deal is: (Points: 2)

Mercantile Bank

Mercantile Bank for the last two years

Boatmen's Bank for the first two years

Boatmen's Bank

none of the above

74. Don deposited $27,500.00 in Trader's Bank at an interest rate of 12% compounded quarterly. (Use Table 10-1 from the textbook.) The effective rate was: (Points: 2)

12.55%

12%

13%

14.0%

none of the above

75. Lisa wants to attend the University of Colorado. She will need to have $80,000.00 five years from today. Lisa is wondering what she will have to put in the bank today so she will have $80,000.00 in five years. Her bank pays 10% compounded quarterly. By using Table 10-3 in the textbook, the amount Lisa will need to deposit is: (Points: 2)

$48,281.68

$49,113.60

$48,821.60

$49,113.06

none of the above

76. The monthly payment of rent is an example of a renter's annuity. (Points: 2)

True

False

77. A contingent annuity has a specific number of payment periods. (Points: 2)

True

False

78. With an annuity due no interest is paid in the first period. (Points: 2)

True

False

79. The amount of an $8,000.00, 10%, 5 year ordinary annuity compounded semiannually is $100,624. (Points: 2)

True

False

80. The maturity value of a transaction is equal to the principal plus the rate. (Points: 2)

True

False

81. John owns five health food stores in the Columbia area, and they are realizing a good profit. John decides to invest a portion of the profits in an annuity offered by Penn Life Insurance. Penn Life will guarantee John 8% interest compounded quarterly for the first 5 years, as long as he deposits $10,000.00 every quarter of the term of the guaranteed rate. Assuming John fulfills the obligations of the investment, what will be the value of the investment at the end of the 5 year term? (Points: 2)

$261,832.74

$245,446.58

$242,970.00

$255,446.40

none of the above

82. The sum of the payments of an annuity plus the interest is called the: (Points: 2)

economic sum

amount of the annuity

financial total

payoff amount

none of the above

83. An annuity without a specific number of payment periods is termed a(n): (Points: 2)

non-standard annuity

annual annuity

annuity certain

contingent annuity

none of the above

84. Nancy plays drums in a dance band on weekends in addition to her full-time job at the local junior college. Nancy decided on her 35th birthday to establish her own retirement savings account by investing $2,400.00 of her weekend earnings every six months into an ordinary annuity paying 12% interest compounded semiannually. If Nancy makes these regular deposits until her 65th birthday, how much will this retirement account be worth? (Points: 2)

$1,297,503.10

$1,281,903.10

$1,297,503.01

$1,279,507.20

none of the above

85. Derek established his own retirement account ten years ago. He has discovered that he can obtain a better rate for the next 10 years at 12% interest compounded semiannually. Consequently, Derek established a new ordinary annuity account (beginning amount $0.00) and he will contribute $7,000.00 semiannually into the account for the next 10 years. What will be the value of this account at the end of the 10 year period? (Points: 2)

$244,707.61

$83,652.59

$264,501.86

$257,502.00

none of the above

86. The table factor for an annuity due of 4% compounded semiannually for 4 years is: (Points: 2)

8.923740

7.436704

2.981042

8.582961

none of the above

87. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is: (Points: 2)

$139,269.60

$23,296.60

$116,000.00

$23,269.60

None of the above

88. A point is 1 percent of the amount of the loan. (Points: 2)

True

False

89. A mortgage of $80,000.00 with 2 points means the borrower must pay $800.00 at the loan closing. (Points: 2)

True

False

90. Not all mortgages are paid on a monthly basis. (Points: 2)

True

False

91. Amortization is not a payment process. (Points: 2)

True

False

92. The primary mortgage on a home is called the: (Points: 2)

first mortgage

collateral

FNMA

real mortgage

none of the above

93. Points represent: (Points: 2)

monthly payments

an additional cost of financing

2 percent of the amount borrowed

a 3 percent up front payment

none of the above

94. Donald purchased a home for $250,000.00. He put down 25 percent of the purchase price. The mortgage was at a rate of 5.50% for 30 years. By using Table 12-1 in the textbook, what were his monthly payments? (Points: 2)

$1,056.00

$1,240.00

$1,065.00

$1,420.00

none of the above

95. Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at the closing. The points amounted to: (Points: 2)

$5,000.00

$2,500.00

$750.00

$7,500.00

none of the above

96. "One point" represents: (Points: 2)

1 percent of the amount borrowed.

1 payment per month.

1 additional percent for every $10,000 borrowed.

1 percent per month additional charge.

none of the above

97. The repayment of a loan in equal installments that are applied to principal and interest over a specific period of time is called: (Points: 2)

amortization

adjustable rate mortgage

conventional mortgage

constant mortgage

none of the above

98. An amortization schedule shows the: (Points: 2)

payment broken down into principal and interest

increase in the principal

balance of interest outstanding

increase in the loan outstanding

none of the above

99. Chuck purchased a home in Texas for $240,000.00. He made a down payment of 20 percent and obtained a mortgage for 25 years at 6%. What amount of his first payment of $1,236.48 applied to interest? (Points: 2)

$276.48

$1,236.48

$960.00

$136.00

none of the above

100. The difference between the monthly payments on a $95,000.00 mortgage at 5% versus 6% for 25 years is: (Use Table 12-1 in the textbook.) (Points: 2)

$56.05

$65.05

$56.50

$56.60

none of the above

________________________________________

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