The questions below are representative of the kinds of questions that will be on the test. The questions do not represent an exhaustive list of the specific types of questions that might be asked.
1. What is the present value of an investment worth $500 eight years from now if it pays 6.2% interest compounded monthly? How much interest would you earn over the term of this investment? What is the annual percentage yield for this investment? Generate a table showing how the balance changes over the first two periods.
2. If you invested $120 a month into a savings account paying 3.4% compounded monthly, how much would you have in ten years and how much interest would you have earned? What is the annual percentage yield for this investment? Generate a table showing how the balance changes over the first two periods.
3. How much could you borrow on a four year loan at 6.9% compounded monthly if you could afford to pay $250 a month? How much interest would you pay? What is the annual percentage rate for this loan? Generate a table showing how the balance changes over the first two periods.
4. If you deposited $1,000 in a savings account paying 5% compounded semiannually, how much would you have in 60 years and how much interest would you have earned? What is the annual percentage yield? Generate a table showing how the balance changes over the first two periods.
5. How much would you have to invest each quarter at 4.1% compounded quarterly if your goal was to have $50,000 in ten years? How much interest would you earn? What is your annual percentage yield? Generate a table showing how the balance changes over the first two periods.
6. What would be your monthly payments on a $200,000 25-year mortgage at 7.2% compounded monthly? How much interest would you pay? What is the annual percentage rate for this loan? Generate a table showing how the balance due changes over the first two periods.
7. Supposed you saved $400 a month for 30 years in a retirement fund earning 5% compounded monthly. When you retire, you elect to take your retirement as a guaranteed 20-year annuity. That is, you (or your heir, in the event of your death) will receive a monthly payment every month for 20 years at which time the account will be empty. What will be the size of the monthly payment? How much interest will this account have earned over its entire 50-year span?
8. A couple finances a new house with a 25-year, $150,000 mortgage at 5.67% compounded monthly. How much is the monthly payment on this mortgage? After four years, the interest rate on the mortgage goes up to 8.05%. How much is the new monthly payment?
9. Suppose a man invested $5,000 ten years ago. The value of that investment today is $10,000. If interest is compounded quarterly, what nominal annual rate of interest is this investment earning?
10. If a couple puts $450 a month into an account paying 1.3% compounded monthly, how long would it take to save up $180,000?