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[answered] Last:___________________________ First:____________________


Although I got answer Key from our instructor, but I still kind of confused about calculation part. could someone help me with? calculation part? ASAP

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Name: Last:___________________________ First:___________________________________ FINA 2330 - 001 FIRST MID TERM EXAM

 

YOU WILL BE GRADED BASED ON YOUR ANSWER ON THE SCANTRON SHEET.

 

THERE ARE 25 QUESTIONS CARRYING EQUAL POINTS EACH. RETURN QUESTION

 

PAPER AND FORMULA SHEET ALONG WITH THE SCANTRON SHEET. REMEMBER

 

TO WRITE YOUR NAME ON SCANTRON SHEET. REMEMBER TO WRITE YOUR NAME

 

ON QUESTION PAPER & FORMULA SHEET. YOU MAY WISH TO WRITE YOUR

 

ANSWERS ON THE QUESTION PAPER FOR YOUR REFERENCE ONLY. THEY CANNOT

 

BE USED FOR GRADING.

 

MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers

 

the question. 1. Liquid assets refer to:

 

a. amounts that must be paid soon.

 

b. cash and other items that are easily converted to cash.

 

c. total income available to a family for spending.

 

d. the value of investments.

 

e. amounts on which taxes must be paid. 2. Which of the following situations is a person who could be insolvent?

 

a. Assets $56,000; annual expenses $60,000

 

b. Assets $78,000; net worth $22,000

 

c. Liabilities $45,000; net worth $6,000

 

d. Assets $40,000; liabilities $45,000

 

e. Annual cash inflows $45,000; liabilities $50,000 3. Payments that do not vary from month to month are ____________ expenses.

 

a. Fixed

 

b. Current

 

c. Variable

 

d. Luxury

 

e. Budgeted 1 4. An example of a long-term goal for a young couple may be:

 

a. a new car.

 

b. reduction of amounts owed on credit cards.

 

c. increased savings.

 

d. income for retirement.

 

e. funds for a vacation. 5. Katherine Kocher has determined the following information about her own financial

 

situation. Her checking account is worth $850 and her savings account is worth $1,200.

 

She owns her own home that has a market value of $98,000. She has a car worth $12,500.

 

She has recently purchased a 2 year certificate of deposit worth $5,500 and she has a

 

retirement account worth $38,550. What is the value of her liquid assets?

 

a. $2,050

 

b. $98,000

 

c. $27,800

 

d. $44,050

 

e. $171,900 6. The main purpose of taxes is to:

 

a. generate revenue for funding government programs.

 

b. reduce the chances of inflation.

 

c. create jobs.

 

d. discourage use of certain goods and services.

 

e. decrease competition from foreign companies. 7. Which of the followings is ?Portfolio Income??

 

a. Wages

 

b. Income from real estate

 

c. Capital gains

 

d. Pension

 

e. None of the above 8. A tax ____________ is an amount subtracted directly from the amount of taxes owed.

 

a. Credit

 

b. Exemption

 

c. Deduction

 

d. Exclusion

 

e. Shelter 2 9. Savings compounded ____________ would have the highest effective yield.

 

a. Daily

 

b. Annually

 

c. Semi-annually

 

d. Monthly

 

e. Weekly 10. A person borrows $200 from a payday loan company, paying $10 interest for two weeks.

 

This would result in an annual interest rate of approximately ___ percent.

 

a. 260

 

b. 130

 

c. 40

 

d. 20

 

e. 5 11. Checking accounts are frequently referred to as ____________ deposits.

 

a. Common

 

b. Time

 

c. Current

 

d. Loan

 

e. Demand 12. The loss of value in a car over time is called:

 

a. maintenance.

 

b. loan payment.

 

c. sales payment.

 

d. commission.

 

e. depreciation. 13. Which of the following statements is true?

 

a. FDIC insures accounts at credit unions

 

b. In 2009, government insurance was temporarily increased to $250,000

 

c. Credit Unions are profit, member-owned financial cooperative

 

d. Credit Unions have lower interest rates than other institutions

 

e. None of the above 3 14. Regarding ?Closed-end lease?, which of the following statements is true?

 

a. ?Walk away? from car when lease is over

 

b. Payment based on car?s residual value

 

c. Upon return, pay difference if car?s worth is less than estimated

 

d. Least popular

 

e. None of the above 15. Which of the followings affect the lease payment?

 

a. Capitalized cost

 

b. Residual value

 

c. Money factor

 

d. Term

 

e. All of the above 16. Your income is $150,000 and you filing status is ?Single?. What is the average tax rate?

 

a. 15.32%

 

b. 20.12%

 

c. 23.36%

 

d. 25.65%

 

e. 28.22% 17. A car dealer offers payments of $522.59 per month for 60 months on a $35,000 car after

 

making a $4,000 down payment. What is the loan?s effective annual interest rate?

 

a. 0.45%

 

b. 0.86%

 

c. 4.5%

 

d. 8.6%

 

e. 12.2% 18. Approximately how much should be accumulated by the beginning of retirement to

 

provide a $3,500 monthly check that will last for 20 years, during which time the fund

 

will earn 5% interest with monthly compounding? 4 a. $530,338

 

b. $670,225

 

c. $753,120

 

d. $840,000

 

e. $912,200

 

19. What is the amount of the annual coupon payment for a bond that has eight years until

 

maturity, sells for $1,050, has the face value of $1,000, and has a yield to maturity of

 

8.37%?

 

a. 8.37%

 

b. 9.25%

 

c. 10.92%

 

d. 11.35%

 

e. 12.35% 20. By how much will a bond increase in price over the next year if it currently sells for $925

 

with the face value of $1,000, has seven years until maturity, and an annual coupon rate

 

of 6%?

 

a. $8.6

 

b. $12.5

 

c. $25.3

 

d. $35.4

 

e. $75.0 21. How much should you be prepared to pay for a 20-year bond with a 4% coupon and a

 

yield to maturity to maturity of 6.5%?

 

a. $283.8

 

b. $456.39

 

c. $724.54

 

d. $1,000.00

 

e. $1,120.00 22. How much interest is earned in the third and fourth years on a $2,000 deposit that earns

 

4% interest compounded annually?

 

a. $86.53

 

b. $163.2 5 c. $176.52

 

d. $249.73

 

e. $339.72 23. In calculating the present value of $1,000 to be received 10 years from today, the

 

discount factor has been calculated to be .7008. What is the apparent interest rate?

 

a. 3.62%

 

b. 5.23%

 

c. 6.85%

 

d. 7.12%

 

e. 8.32% 24. What is the present value of the following payment stream, discounted at 5% annually:

 

$2,000 at the end of year 1, $3,000 at the end of year 2, $3,000 at the end of year 3, and

 

$4,000 at the end of year 5?

 

a. $10,351

 

b. $10,508

 

c. $11,120

 

d. $12,000

 

e. $13,200 6 25. What is the concept of ?Time Value of Money??

 

a. $100 at the present time is worth more than $100 in the future due to its potential

 

earning capacity.

 

b. $100 at the present time is worth exactly the same as $100 in the future.

 

c. Who cares? 7 Single

 

Taxable Income Tax Rate $0?$9,275 10% $9,276?$37,650 $927.50 plus 15% of the amount over $9,275 $37,651?$91,150 $5,183.75 plus 25% of the amount over $37,650 $91,151?$190,150 $18,558.75 plus 28% of the amount over $91,150 $190,151?$ 413,350 $46,278.75 plus 33% of the amount over $190,150 $413,351?$415,050 $119,934.75 plus 35% of the amount over $413,350 $415,051 or more $120,529.75 plus 39.6% of the amount over $415,050 Married Filing Jointly or Qualifying Widow(er)

 

Taxable Income Tax Rate $0?$18,550 10% $18,551?$75,300 $1,855 plus 15% of the amount over $18,550 $75,301?$151,900 $10,367.50 plus 25% of the amount over $75,300 $151,901?$231,450 $29,517.50 plus 28% of the amount over $151,900 $231,451?$413,350 $51,791.50 plus 33% of the amount over $231,450 $413,351?$466,950 $111,818.50 plus 35% of the amount over $413,350 $466,951 or more $130,578.50 plus 39.6% of the amount over $466,950 Married Filing Separately

 

Taxable Income Tax Rate $0?$9,275 10% $9,276?$37,650 $927.50 plus 15% of the amount over $9,275 $37,651?$75,950 $5,183.75 plus 25% of the amount over $37,650 $75,951?$115,725 $14,758.75 plus 28% of the amount over $75,950 $115,726?$206,675 $25,895.75 plus 33% of the amount over $115,725 $206,676?$233,475 $55,909.25 plus 35% of the amount over $206,675 $233,476 or more $65,289.25 plus 39.6% of the amount over $233,475 Head of Household

 

Taxable Income Tax Rate $0?$13,250 10% $13,251?$50,400 $1,325 plus 15% of the amount over $13,250 $50,401?$130,150 $6,897.50 plus 25% of the amount over $50,400 $130,151?$210,800 $26,835 plus 28% of the amount over $130,150 $210,801?$413,350 $49,417 plus 33% of the amount over $210,800 $413,351?$441,000 $116,258.50 plus 35% of the amount over $413,350 $441,001 or more $125,936 plus 39.6% of the amount over $441,000 8 2016 tax brackets (for taxes due April 17, 2017)

 

Tax

 

rate Single filers Married filing jointly or

 

qualifying

 

widow/widower Married filing

 

separately Head of household 10% Up to $9,275 Up to $18,550 Up to $9,275 Up to $13,250 15% $9,276 to $37,650 $18,551 to $75,300 $9,276 to $37,650 $13,251 to $50,400 25% $37,651 to $91,150 $75,301 to $151,900 $37,651 to $75,950 $50,401 to $130,150 28% $91,151 to $190,150 $151,901 to $231,450 $75,951 to $115,725 $130,151 to $210,800 33% $190,151 to $413,350 $231,451 to $413,350 $115,726 to $206,675 $210,801 to $413,350 35% $413,351 to $415,050 $413,351 to $466,950 $206,676 to $233,475 $413,351 to $441,000 39.6% $415,051 or more $466,951 or more $233,476 or more $441,001 or more 9 PV of Annuity:

 

PV =C [( ) ( ) ( ) ]

 

1

 

1

 

1

 

? ?

 

r

 

r

 

1+r n PV:

 

1

 

PV =FV

 

1+r n ( ) FV:

 

FV =PV ( 1+r ) n Value of Bond:

 

PV =C [( ) ( ) ( ) ] ( )

 

1

 

1

 

1

 

? ?

 

r

 

r

 

1+r n + FV 1

 

1+r n 10

 


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