ECON 350 Portion One Exam Questions with 100% Correct Answers The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the✔✔ - Interest rate (I) A bond is a debt security that promises to make payments periodically for a spe cified period of time. (II) A stock is a security that is a claim on the earnings and assets of a corporation. ✔✔ - Both are true. Use the information for the question(s) below. Alaska North Slope Crude Oil (ANS) $71.75/bbl West Texas Intermediate Crude Oi l (WTI) $73.06/bbl As an oil refiner, you are able to produce $78 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $79 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude. Another oil refiner is offering to trade you of Alaska North Slope (ANS) crude oil for of West Texas Intermediate (WTI) crude oil. Assuming you currently have of WTI crude, the added benefit (cost) to you if you take the trade is closest to ________. ✔✔ - $1700 Table 9 -15 Year Nominal Average Hourly Earnings CPI 2014 $10 100 2015 10 105 2016 12 110 Refer to Table 9 -15. Looking at the table above, real average hourly earnings were equal to ________ in 2015. ✔✔ - $9.52 What is the present value (PV) of $100,000 received six years from now, assuming the interest rate is 8% per year? ✔✔ - $63,016.96 An annuity pays $10 per year for 98 years. What is the present value (PV) of this annuity given that the discount rate is 7%? ✔✔ - $142.67 Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $42,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. Likewise, you expect to deposit 8% of your salary each year until you reach age 65. Assume that the ra te of interest is 9%. The present value (PV) (at age 30) of your retirement savings is closest to ________. ✔✔ - $61,303 A basic economic principle is that the price of any financial asset ________ the present value of its expected cash flow, even if the c ash flow is not known with certainty. ✔✔ - Is equal to You own 1200 shares of Newstar Financial stock, currently trading for $56 per share. You are offered a deal where you can exchange these stocks for 1100 shares of Amback Financial Group stock, currently trading at $59 per share. What is the value of this trade, if you choose to make it? ✔✔ - -
$2300 Which of the following accounts has the highest EAR?
$2300 Which of the following accounts has the highest EAR?
