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    jibarra3's Avatar
    jibarra3 Posts: 1, Reputation: 1
    New Member

    Oct 24, 2006, 04:19 PM
    Question 1:
    If 10,000 is deposited in a money market when interest is coumpounded every month at an annual rate of 5%, the total amount accumulated at the end of a 5 years will be?
    A) 12,762.82
    B) 10,210.08
    C) 12,833.59
    D) None of these

    Question 2:
    What would cost to buy a U.S Treasury bill that pays 10,000 after 6 months where the simple annual interest rate is 3.75% ( Round to the nearestcent)
    A) 9,625.45
    B) 9,812.50
    C) 9,815.95
    D) None of these

    Question 3:
    How much should a bank bid on a 500,000 180 day T bill to earn 5.8% simple discount rate? Assume 360 days in a year (Round to the nearest dollar)
    A) 485,909
    B) 485,500
    C) 485,000
    D) None of these
    RickJ's Avatar
    RickJ Posts: 7,762, Reputation: 864
    Uber Member

    Oct 25, 2006, 07:19 AM
    Here's a TVM calculator for questions like that:
    tharu's Avatar
    tharu Posts: 1, Reputation: 1
    New Member

    Nov 17, 2006, 08:57 AM
    1. Ans(a);
    Use da equ. : cumulative amount=initial val*int rate^periods.
    the int. rate given is annual 10000*(1.05^5).
    2. Ans(c);
    Apply x(1+n*r)=current value; where x initial cost,n= no of periods,r=rate
    i.e x(1+1/2*.0375)=10000;
    x(1.018... )=10000;
    3. No idea??
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member

    Nov 17, 2006, 03:21 PM
    Question 1: 10,000 x 1.055 = 12,762.82 OR ANSWER A

    Question 2:
    variable x 1.0375 /2 = 10,000
    variable x 1.01875 = 10,000
    variable = 10,000 / 1.01875
    variable = 9,815.95

    or ANSWER C

    Question 3:
    5.8% rate for 180 days out of 360 days (50%)
    Therefore rate of 5.8/2 = 2.9%

    variable x 1.029 = 500,000
    variable = 500,000 / 1.029
    variable = 485,908.65 = 485,909

    or ANSWER A

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