Question 1

On February 1 of 3 successive years, Roger contributed $3,000, $4,000, and $3500, respectively, to his RRSP. The funds in his plan earned 9% compounded monthly for the first year, 8.5% compounded quarterly for the second year, and 7.75% compounded semi-annually for the third year. What was the value of his RRSP 3 years after the first contribution?

Accepted Answer

The answer of On February 1 of 3 successive years,...

Question 2

How, if at all, will the future value of a 3-year variable-rate GIC differ if it earns 4%, 5%, and 6% in successive years instead of 6%, 5%, and 4% in successive years?

Accepted Answer

The answer of How, if at all, will the future...

Question 3

Roger has just invested $60,000 in a five-year Guaranteed Investment Certificate (GIC) earning 3% compounded semi-annually. When the GIC matures, he will reinvest its entire maturity value in a new five-year GIC. What will be the maturity value of the second GIC if it yields:
a) The same rate as the current GIC?
b) 4% compounded semi-annually?
c) 2% compounded semi-annually?

Accepted Answer

The answer of Roger has just invested $60,000 in a...

Question 4

Mr. Dickson purchased a 7-year, $30,000 compound-interest GIC with funds in his RRSP. If the interest rate on the GIC is 4.25% compounded semi-annually, what is the GIC's maturity value?

Accepted Answer

The answer of Mr. Dickson purchased a 7-year, $30,000 compound-interest...

Question 5

The BMO Bank of Montreal advertised rates of 1.8%, 2.25%, 2.6%, 3%, and 3.25% for the five successive years of its five-year compound-interest Rate Optimizer GIC. At the same time, the bank was offering fixed-rate five-year compound-interest GICs yielding 2.75% compounded annually. What total interest would be earned during the five-year term on a $5,000 investment in each type of GIC?

Accepted Answer

The answer of The BMO Bank of Montreal advertised rates...

Question 6

Mrs. Sandhu placed $11,500 in a 4-year compound-interest GIC earning 3.75% compounded monthly. What is the GIC's maturity value?

Accepted Answer

The answer of Mrs. Sandhu placed $11,500 in a 4-year...

Question 7

On the same date that the CIBC advertised rates of 2%, 2.5%, 3%, 3.25%, and 7% in successive years of its five-year compound-interest Escalating Rate GIC, it offered 2.75% compounded annually on its five-year fixed-rate GIC. How much more will a $10,000 investment be worth at maturity if the Escalating Rate GIC is chosen instead of the fixed-rate GIC?

Accepted Answer

The answer of On the same date that the CIBC...

Question 8

What amount did the owner of a $10,000 face value compound-interest series S120 CSB receive when he redeemed the bond on: a) November 1, 2012? b) May 19, 2013?

Accepted Answer

The answer of What amount did the owner of a...

Question 9

For a given term of compound-interest GIC, the nominal interest rate with annual compounding is typically 0.125% higher than the rate with semi-annual compounding and 0.25% higher than the rate with monthly compounding. Suppose that the rates for 5-year GICs are 3.00%, 2.875%, and 2.75% for annual, semi-annual, and monthly compounding, respectively. How much more will an investor earn over 5 years on a $10,000 GIC at the most favourable rate than at the least favourable rate?

Accepted Answer

The answer of For a given term of compound-interest GIC,...

Question 10

If an investor has the choice between rates of 5.5% compounded semi-annually and 5.6% compounded annually for a six-year GIC, which rate should be chosen?

Accepted Answer

The answer of If an investor has the choice between...

Question 11

On the same date that the Alberta Treasury Branches were advertising rates of 2.25%, 3%, 3.75%, 4.5%, and 6.5% in successive years of their five-year compound-interest Springboard GIC, they offered 3.5% compounded annually on their five-year fixed-rate compound-interest GIC.
a) What will be the maturity values of $10,000 invested in each GIC?
b) How much interest will each GIC earn in the third year?

Accepted Answer

The answer of On the same date that the Alberta...

Question 12

Stan purchased a $15,000 compound-interest Series S122 Canada Savings Bond on January 1, 2010. The interest rate in the first year was 0.40% and in the second year was 0.65%. What interest did he receive when he redeemed the CSB on November 1, 2012?

Accepted Answer

The answer of Stan purchased a $15,000 compound-interest Series S122...

Question 13

A four-year $7,000 promissory note bearing interest at 10.5% compounded monthly was discounted 18 months after issue to yield 9.5% compounded quarterly. What were the proceeds from the sale of the note?

Accepted Answer

The answer of A four-year $7,000 promissory note bearing interest...

Question 14

Krista invested $18,000 in a 3-year regular-interest GIC earning 4.2% compounded semi-annually. What is the semi-annual interest payment?

Accepted Answer

The answer of Krista invested $18,000 in a 3-year regular-interest...

Question 15

Eric invested $22,000 in a 5-year regular-interest GIC earning 4.5% compounded monthly. What is each monthly interest payment?

Accepted Answer

The answer of Eric invested $22,000 in a 5-year regular-interest...

Question 16

If an investor has the choice between rates of 5.4% compounded quarterly and 5.5% compounded annually for a six-year GIC, which rate should be chosen?

Accepted Answer

The answer of If an investor has the choice between...

Question 17

A trust company offers 3-year compound-interest GICs earning 4.8% compounded monthly or 4.9% compounded semi-annually. Which rate should an investor choose?

Accepted Answer

The answer of A trust company offers 3-year compound-interest GICs...

Question 18

What was the redemption value of a $300 face value compound-interest series S108 CSB on March 8, 2013?

Accepted Answer

The answer of What was the redemption value of a...

Question 19

What amount did the owner of a $5,000 face value compound-interest series S114 Canada Savings Bond receive when she redeemed the bond on: a) November 1, 20012? b) August 21, 2013?

Accepted Answer