# Quiz 7: Applications of Simple Interest

Business

Q 1Q 1

What will be the maturity value of $25,000 placed in a 90-day term deposit paying a simple interest rate of 4.75%?
A) $24,710.58
B) $25,396.77
C) $25,292.81
D) $25,306.77
E) $25,302.57

Free

Multiple Choice

C

Q 2Q 2

A 4-month Guaranteed Investment Certificate with a face value of $55,000 will have a maturity value of $56,100. What simple annual interest rate is it carrying?
A) 6.00%
B) 10.20%
C) 2.00%
D) 8.00%
E) 20.00%

Free

Multiple Choice

A

Q 3Q 3

How much simple interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%?
A) $143
B) $696
C) $763
D) $855
E) $978

Free

Multiple Choice

D

Q 4Q 4

What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?
A) 5.00%
B) 8.16%
C) 8.57%
D) 8.95%
E) 9.88%

Free

Multiple Choice

Q 5Q 5

What simple interest rate was used to discount 270-day, $750,000 commercial paper when it was issued for $710,000?
A) 7.21%
B) 7.62%
C) 5.33%
D) 6.63%
E) 6.94%

Free

Multiple Choice

Q 6Q 6

A 7-month, $75,400 Guaranteed Investment Certificate pays simple interest of 6.85%. Calculate the maturity value.
A) $72,912
B) $76,201
C) $76,309
D) $86,112
E) $78,413

Free

Multiple Choice

Q 7Q 7

Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15% simple interest.
A) $5,756.34
B) $6,253.97
C) $6,309.00
D) $6,111.78
E) $7,021.99

Free

Multiple Choice

Q 8Q 8

At the end of September Andy had $9,000 in his daily interest savings account. On the 12

^{th}of October he withdrew $4,000. He made no other withdrawals or deposits in October. The simple interest rate throughout October was 4.2%. How much interest did Andy earn on this savings account in October? A) $9.21 B) $41.31 C) $22.90 D) $19.82 E) $26.17Free

Multiple Choice

Q 9Q 9

At the end of April, Brad had $7,500 in his daily interest savings account. On the 13

^{th}of May he deposited another $3,500. He made no other deposits or withdrawals in May. The simple interest rate throughout May was 3.7%. How much interest did Brad earn on this savings account in May? A) $16.83 B) $30.31 C) $21.99 D) $39.52 E) $46.17Free

Multiple Choice

Q 10Q 10

The current rates on 90- and 180-day GICs are 5.5% and 6% simple interest, respectively. An investor is trying to decide whether to purchase a 90-day GIC and then reinvest its maturity value in a second 90-day GIC. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative?
A) 5.595%
B) 6.500%
C) 6.249%
D) 6.413%
E) 7.000%

Free

Multiple Choice

Q 11Q 11

A contract requires payments of $2,000 and $3,000, 90 days and 120 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a rate of return of 12% simple interest?
A) $4,824.06
B) $4,828.66
C) $4,831.48
D) $4,837.87
E) $5,177.53

Free

Multiple Choice

Q 12Q 12

An investment earning 16% simple interest has a maturity value of $9,440.00 after eight months. What was the initial amount invested?
A) $8,530.12
B) $10,446.93
C) $7,228.92
D) $8,853.33
E) $7,780.22

Free

Multiple Choice

Q 13Q 13

An investment will pay $3,000 six months from now. What purchase price will provide a rate of return of 12% simple interest?
A) $2,830.19
B) $3,180.00
C) $2,000.00
D) $2,500.00
E) $2,724.17

Free

Multiple Choice

Q 14Q 14

On February 1, John signed a contract to pay Janet $4,500 plus interest on April 2 and $5,500 plus interest on July 31. Both payments carried a 6.5% simple interest annually. Janet then sold both contracts to Fred on May 1 at a rate of 4.5% annually. Determine how much she received.
A) $10,145.20
B) $10,300.18
C) $10,451.07
D) $10,618.30
E) $11,863.54

Free

Multiple Choice

Q 15Q 15

On January 15, Mario signed a contract to pay Stephan $12,000 plus 9% simple interest on May 15 and $18,000 plus 10% interest on September 12. On August 15, Stephan then sold the first contract to Sally at a rate of 11% and the other contract to Anna for 12%. Determine the amount Stephan received on August 15.
A) $33,333.33
B) $31,030.33
C) $30,130.33
D) $29,313.33
E) $26,613.33

Free

Multiple Choice

Q 16Q 16

A 182-day, $250,000 Treasury Bill originally issued at 6.6% was sold at 5.9% simple interest, 82 days after it was issued. What was the selling price?
A) $245,560
B) $250,000
C) $246,730
D) $246,347
E) $246,023

Free

Multiple Choice

Q 17Q 17

What is the price of a $50,000, 182-day T-bill on its issue date if the market rate of return on this date was 6.875% simple interest?
A) $48,342.77
B) $48,262.15
C) $48,285.96
D) $48,148.15
E) $48,320.53

Free

Multiple Choice

Q 18Q 18

Commercial Paper with a face value of $1,000,000 issued at a discount rate of 7.5% simple interest has a term of 360 days. At what price was it issued?
A) $944,736
B) $1,000,000
C) $925,000
D) $1,073,973
E) $931,122

Free

Multiple Choice

Q 19Q 19

Determine the issue price of a 91-day, $100,000 Government of Alberta Treasury Bill that was issued at a discount rate of 5.75% simple interest.
A) $98,587
B) $94,250
C) $96,194
D) $100,000
E) $101,434

Free

Multiple Choice

Q 20Q 20

270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price?
A) $473,668
B) $508,636
C) $491,511
D) $527,796
E) $490,929

Free

Multiple Choice

Q 21Q 21

Calculate the simple rate of return on a $1,000,000 181-day Treasury Bill that was issued for $970,639.
A) 6.1%
B) 5.9%
C) 4.9%
D) 5.5%
E) 7.7%

Free

Multiple Choice

Q 22Q 22

A $500,000 268-day Treasury Bill was issued to Buyer #1 at 4.1 % simple interest. 168 days before the T-Bill reached maturity it was sold by Buyer #1 at a rate that would provide Buyer #2 with a return of 3.4% if Buyer #2 held the T-Bill to maturity. What annual simple rate did Buyer #1 actually realize over the period that Buyer #1 held the T-Bill?
A) 4.10%
B) 3.09%
C) 5.19%
D) 4.47%
E) 6.77%

Free

Multiple Choice

Q 23Q 23

An investor purchased a 91-day, $100,000 T-bill on its date of issue for $97,500, and sold it 40 days later for $98,475. What simple interest rate of return did the original investor actually realize during the 40-day holding period?
A) 2.5%
B) 8.898%
C) 10.027%
D) 4.011%
E) 9.125%

Free

Multiple Choice

Q 24Q 24

An $8,000 demand loan at a fixed simple interest rate of 10.5% was advanced on May 10. A payment of $2,000 was made on July 15 and a final payment was made on Sept. 5. What was the size of the final payment?
A) $6,241.64
B) $6,243.92
C) $6,363.61
D) $6,151.89
E) $8,152.90

Free

Multiple Choice

Q 25Q 25

Alice purchased a $100,000 180-day Acme Corporation Commercial Paper when it was first issued at a yield simple interest rate of 7.45%. 50 days later she sold it to Betty at a rate that would provide Betty with a return of 8.45% if Betty held it to maturity. What annual simple rate did Alice actually realize over the period that she held the Commercial Paper?
A) 6.45%
B) 4.71%
C) 7.45%
D) 6.98%
E) 7.95%

Free

Multiple Choice

Q 26Q 26

On January 20, Derek signed a contract to pay Violet $1,800 plus interest on August 15 and $2,200 plus interest on September 12. Both payments carried a 6% simple interest annually. Violet then sold both contracts to Stephanie on May 10 at a rate of 3.5% annually. Determine how much she received Round to the nearest $100.
A) $5,267.29
B) $4,859.27
C) $4,459.27
D) $4,039.27
E) $3,827.29

Free

Multiple Choice

Q 27Q 27

On January 5, Steven received a $25,000 advance on a revolving line of credit at 3.75% annual rate. On march 5, the annual rate increased to 4.25%. Determine the simple interest to be paid from January 5

^{th}to August 15^{th}. A) $626.03 B) $632.03 C) $638.03 D) $644.03 E) $650.03Free

Multiple Choice

Q 28Q 28

On July 1, David borrowed $9,500 from his revolving line of credit. At the time the annual simple interest rate was 3.80%. On September 15, the annual interest rate was lowered to 3.60%. Determine the interest paid from July 1

^{st}to December 31^{st}. A) $99.62 B) $171.47 C) $180.99 D) $164.05 E) $176.22Free

Multiple Choice

Q 29Q 29

On January 20, Samantha borrowed $17,000 from her revolving line of credit. The current annual simple interest rate at the time was 4.5%. On May 5, Samantha borrowed another $10,000. Due to an increase in borrowing, the annual interest rate increased to 4.75%. On August 12, Samantha repaid the total amount borrowed, along with interest. Determine the interest amount to be repaid.
A) $516.35
B) $544.22
C) $567.92
D) $606.38
E) $641.12

Free

Multiple Choice

Q 30Q 30

On March 17, Luke borrowed $4,500 from his revolving line of credit. The current annual interest rate at the time was 5.30%. On April 30, Luke repaid $1,500, and concurrently the annual interest rate decreased to 5.10%. On June 30, Luke repaid the total amount borrowed, along with interest. Determine the simple interest amount to be repaid.
A) $51.80
B) $52.67
C) $53.48
D) $54.32
E) $55.15

Free

Multiple Choice

Q 31Q 31

On May 1, Gladis borrowed $10,000 on a line of credit with an annual rate of 7.75%. On August 15, Gladis repaid half of the loan. From August 15 to December 31, the interest rate decreased to an annual rate of 7.50%. Determine the total simple interest charged from May 1 to December 31, when Gladis repaid all obligations.
A) $358.67
B) $366.85
C) $371.91
D) $383.42
E) $397.86

Free

Multiple Choice

Q 32Q 32

On January 12, Alex has student loans totalling $14,000. Alex agreed to a $200 per month repayment schedule at which time the annual interest rate was 5.5% simple interest. Determine the balance of the loan at the end of January.
A) $13,840.08
B) $13,845.20
C) $13,881.91
D) $13,728.47
E) $13,990.64

Free

Multiple Choice

Q 33Q 33

On September 15, Miguel has student loans totalling $25,000. Miguel agreed to a $350 per month repayment schedule at which time the annual simple interest rate was 7.45%. Determine the balance of the loan at the end of November.
A) $25,666.55
B) $25,555.44
C) $24,444.55
D) $24,333.22
E) $24,666,33

Free

Multiple Choice

Q 34Q 34

On February 22, Jonathan had $20,000 of student loans. He agreed to a payment plan of $225 per month at an annual simple interest rate of 8.40%. Determine how much of the $225 will go towards the principal at the end of March.
A) $80.25
B) $81.68
C) $83.72
D) $84.58
E) $88.92

Free

Multiple Choice

Q 35Q 35

On October 15, Jerome had $9,000 of student loans. He agreed to a payment plan of $150 per month at an annual rate of 9.60% simple interest. Determine how much of the $150 will go towards the principal at the end of December.
A) $77.81
B) $78.18
C) $79.27
D) $80.08
E) $81.18

Free

Multiple Choice

Q 36Q 36

On January 1, Natalie had $15,000 in student loans outstanding. She agreed to $90 per month payments to repay these loans. From January 1 to February 14, the simple interest rates were 7.0%, but increased to 7.5% thereafter. Calculate the amount of interest paid for the month of February.
A) $87.80
B) $86.70
C) $85.60
D) $84.30
E) $83.40

Free

Multiple Choice

Q 37Q 37

On April 7, Madeline had $10,500 in student loans outstanding. She agreed to $75 per month payments to repay these loans. From April 7 to May 5, the interest rates were 3.25%, but increased to 4.5% thereafter. Calculate the amount of simple interest paid for the month of May.
A) $37.93
B) $38.01
C) $38.14
D) $38.88
E) $39.25

Free

Multiple Choice

Q 38Q 38

On September 12, Claire had $8,000 in student loans outstanding. She agreed to $125 per month payments to repay these loans. From September 12 to October 8, the simple interest rates were 5.0%, but decreased to 4.5% thereafter. Calculate the balance outstanding on October 31.
A) $7,800.76
B) $7,808.96
C) $7,819.27
D) $7,826.34
E) $7,855.68

Free

Multiple Choice

Q 39Q 39

Liam had $5,200 in student loans. On August 9, he began repayments of $50 per month when simple interest rates were 9.2% annually. On September 8, the interest rates rose to 9.5%. By what amount will the principal be reduced given the $50 payment on September 30?
A) $8.90
B) $9.91
C) $10.90
D) $11.90
E) $12.90

Free

Multiple Choice

Q 40Q 40

Ada had $12,500 in student loans. On Sept 3, she began repayments of $450 per month when simple interest rates were 9.2% annually. On October 8 the interest rates rose to 9.5%. By what amount will the principal be reduced given the $450 payment on October 31?
A) $361.42
B) $355.18
C) $352.09
D) $350.01
E) $347.78

Free

Multiple Choice

Q 41Q 41

For amounts between $10,000 and $24,999, a credit union pays a rate of 1.25% simple interest on term deposits with maturities in the 91 to 120-day range. However, early redemption will result in a rate of 0.55% being applied. How much more interest will a 91-day $20,000 term deposit earn if it is held until maturity than if it is redeemed after 80 days?

Free

Short Answer

Q 42Q 42

On a $10,000 principal investment, a bank offered simple interest rates of 1.45% on 270- to 364-day GIC's and 1.15% on 180- to 269-day GICs. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICs? (Assume that the interest rate on 180- to 269-day GICs will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)

Free

Short Answer

Q 43Q 43

Paul has $20,000 to invest for 6 months. For this amount, his bank pays 1.3% simple interest on a 90-day GIC and 1.5% on a 180-day GIC. If the interest rate on a 90-day GIC is the same 3 months from now, how much more interest will Paul earn by purchasing the 180-day GIC than by buying a 90-day GIC and then reinvesting its maturity value in a second 90-day GIC?

Free

Short Answer

Q 44Q 44

Joan has savings of $12,000 on June 1. Since she may need some of the savings during the next 3 months, she is considering two options at her bank. (1) An Investment Builder savings account earns a 0.25% rate of interest. The interest is calculated on the daily closing balance and paid on the first day of the following month. (2) A 90- to 179-day cashable term deposit earns a rate of 0.8%, paid at maturity. If simple interest rates do not change and Joan does not withdraw any of the funds, how much more will she earn from the term deposit up to September 1? (Keep in mind that savings account interest paid on the first day of the month will itself subsequently earn interest during the subsequent month.)

Free

Short Answer

Q 45Q 45

A savings account pays interest of 1.5% simple interest. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. A depositor had a $2,239 opening balance on September 1, deposited $734 on September 7 and $627 on September 21, and withdrew $300 on both September 10 and September 21. What interest will be credited to the account at the month's end?

Free

Short Answer

Q 46Q 46

Suppose that the current rates on 60 and 120-day GICs are 1.50% and 1.75% simple interest, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then reinvesting its maturity value in a second 60-day GIC. What would the interest rate on 60-day GICs have to be 60 days from now for the investor to end up in the same financial position with either alternative?

Free

Short Answer

Q 47Q 47

An Investment Savings account offered by a trust company pays a rate of 0.25% on the first $1,000 of daily closing balance, 0.5% on the portion of the balance between $1,000 and $3,000, and 0.75% on any balance in excess of $3,000. What simple interest will be paid for the month of April if the opening balance was $2,439, $950 was deposited on April 10, and $500 was withdrawn on April 23?

Free

Short Answer

Q 48Q 48

For principal amounts of $5,000 to $49,999, a bank pays an interest rate of 0.95% on 180- to 269-day non-redeemable GICs, and 1.00% on 270- to 364-day non-redeemable GICs. Ranjit has $10,000 to invest for 364 days. Because he thinks interest rates will be higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the simple interest rate on 182-day GICs have to be on the reinvestment date for both alternatives to yield the same maturity value 364 days from now?

Free

Short Answer

Q 49Q 49

What do you need to know to be able to calculate the fair market value of an investment that will deliver two future payments?

Free

Essay

Q 50Q 50

If you purchase an investment privately, how do you determine the maximum price you are prepared to pay?

Free

Essay

Q 51Q 51

A contract requires payments of $1,500, $2,000, and $1,000 in 100, 150, and 200 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a 3.5% simple interest rate of return?

Free

Short Answer

Q 52Q 52

An agreement stipulates payments of $4,000, $2,500, and $5,000 in 3, 6, and 9 months, respectively, from today. What is the highest price an investor will offer today to purchase the agreement if he requires a minimum simple interest rate of return of 6.25%?

Free

Short Answer

Q 53Q 53

An agreement stipulates payments of $4,500, $3,000, and $5,500 in 4, 8, and 12 months, respectively, from today. What is the highest price an investor will offer today to purchase the agreement if he requires a minimum simple interest rate of return of 5.5%?

Free

Short Answer

Q 54Q 54

An assignable loan contract executed 3 months ago requires two payments of $3,200 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in order to raise urgently needed cash. If the finance company requires a 16% simple interest rate of return, what price will it be prepared to pay today for the contract?

Free

Short Answer

Q 55Q 55

An assignable loan contract executed three months ago requires two payments to be paid five and ten months after the contract date. Each payment consists of a principal portion of $1,800 plus interest at 5% on $1,800 from the date of the contract. The payee is offering to sell the contract to a finance company in order to raise cash. If the finance company requires a return of 10% simple interest, what price will it be prepared to pay today for the contract?

Free

Short Answer

Q 56Q 56

Claude Scales, a commercial fisherman, bought a new navigation system for $10,000 from Coast Marine Electronics on March 20. He paid $2,000 in cash and signed a conditional sales contract requiring a payment on July 1 of $3,000 plus interest on the $3,000 at a rate of 8%, and another payment on September 1 of $5,000 plus interest at 8% from the date of the sale. The vendor immediately sold the contract to a finance company, which discounted the payments at its required return of 12% simple interest. What proceeds did Coast Marine receive from the sale of the contract?

Free

Short Answer

Q 57Q 57

A conditional sale contract requires two payments 3 and 6 months after the date of the contract. Each payment consists of $1,900 principal plus simple interest at 10.5% on $1,900 from the date of the contract. One month into the contract, what price would a finance company pay for the contract if it requires an 16% rate of return on its purchases?

Free

Short Answer

Q 58Q 58

Calculate the price of a $25,000, 91-day Province of British Columbia Treasury bill on its issue date if the current market rate of return is 3.672% simple interest.

Free

Short Answer

Q 59Q 59

Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by G E Capital Canada if the prevailing market rate of return is 0.932 simple interest%.

Free

Short Answer

Q 60Q 60

A money market mutual fund purchased $1 million face value of Honda Canada Finance Inc. 90-day commercial paper 28 days after its issue. What price was paid if the paper was discounted at 2.10% simple interest?

Free

Short Answer

Q 61Q 61

A $100,000, 91-day Province of Ontario Treasury bill was issued 37 days ago. What will it sell at today in order to yield the purchaser 3.14% simple interest?

Free

Short Answer

Q 62Q 62

Calculate and compare the market values of a $100,000 face value Government of Canada Treasury bill on dates that are 91 days, 61 days, 31 days, and one day before maturity. Assume that the rate of return required in the market stays constant at 3% simple interest over the lifetime of the T-bill.

Free

Essay

Q 63Q 63

A $100,000, 90-day commercial paper certificate issued by Wells Fargo Financial Canada was sold on its issue date for $99,250. What simple interest rate of return will it yield to the buyer?

Free

Short Answer

Q 64Q 64

A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48% simple interest?

Free

Short Answer

Q 65Q 65

A $100,000, 90-day commercial paper certificate issued by Bell Canada Enterprises was sold on its issue date for $98,950. What annual simple interest rate of return (to the nearest 0.001%) will it yield to the buyer?

Free

Short Answer

Q 66Q 66

A 168-day, $100,000 T-bill was initially issued at a price that would yield the buyer 4.19% simple interest. If the yield required by the market remains at 4.19%, how many days before its maturity date will the T-bill's market price first exceed $99,000?

Free

Short Answer

Q 67Q 67

Over the past 35 years, the prevailing market yield or discount rate on 90-day T-bills has ranged from a low of 0.17% in February 2010 to a high of 20.82% simple interest in August of 1981. (The period from 1979 to 1990 was a time of historically high inflation rates and interest rates.) How much more would you have paid for a $100,000 face value 90-day T-bill at the February 2010 discount rate than at the August 1981 discount rate?

Free

Short Answer

Q 68Q 68

Monica finished her program at New Brunswick Community College on June 3 with Canada Student Loans totalling $6,800. She decided to capitalize the interest that accrued (at prime plus 2.5%) during the grace period. In addition to regular end-of-month payments of $200, she made an extra $500 lump payment on March 25 that was applied entirely to principal. The prime rate dropped from 5% to 4.75% effective September 22, and declined another 0.5% effective March 2. Calculate the balance owed on the floating rate option after the regular March 31 payment. The relevant February had 28 days.

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 84Q 84

Calculate the maturity value of a 120-day, $1,000 face value promissory note dated November 30, 2015, and earning interest at 4.75% simple interest.

Free

Short Answer

Q 85Q 85

Calculate the maturity value of a $1,000 face value, 5-month promissory note dated December 31, 2015, and bearing interest at 9.5% simple interest.

Free

Short Answer

Q 86Q 86

A 90-day non-interest-bearing promissory note for $3,300 is dated August 1. What would be a fair selling price of the note on September 1 if money can earn 7.75% simple interest?

Free

Short Answer

Q 87Q 87

A 6-month non-interest-bearing promissory note issued on September 30, 2015 for $3,300 was discounted at 5.25% on December 1. What were the proceeds of the note?

Free

Short Answer

Q 88Q 88

A 100-day $750 promissory note with interest at 12.5% simple interest was written on July 15. The maker approaches the payee on August 10 to propose an early settlement. What amount should the payee be willing to accept on August 10 if short-term investments can earn 8.25%?

Free

Short Answer

Q 89Q 89

The payee on a 3-month $2,700 promissory note earning interest at 4% simple interest wishes to sell the note to raise some cash. What price should she be prepared to accept for the note (dated May 19) on June 5 in order to yield the purchaser a 7% rate of return?

Free

Short Answer

Q 90Q 90

A 6-month note dated June 30 for $2,900 bears interest at 8.5% simple interest. Determine the proceeds of the promissory note if it is discounted at 4.75% on September 1.

Free

Short Answer

Q 91Q 91

An investor is prepared to buy short-term promissory notes at a price that will provide him with a return on investment of 12% simple interest. What amount would he pay on August 9 for a 120-day note dated July 18 for $4,100 with interest at 10.25% pa?

Free

Short Answer

Q 92Q 92

For investments of $5,000 to $24,999, a bank quotes interest rates of 2.65% on 90-day GICs and 2.85% on 180-day GICs. How much more simple interest will an investor earn by placing $15,000 in a 180-day GIC than by purchasing two consecutive 90-day GICs? (Assume that interest rates do not change over the next 90 days. Remember that interest earned from the first 90-day GIC can be invested in the second 90-day GIC.)

Free

Short Answer

Q 93Q 93

For 90- to 365-day GICs, TD Canada Trust offered a rate of 3.00% simple interest on investments of $25,000 to $59,999 and a rate of 3.20% on investments of $60,000 to $99,999. How much more will an investor earn from a single $60,000, 270-day GIC than from two $30,000, 270-day GICs?

Free

Short Answer

Q 94Q 94

A chartered bank offers a rate of 5.50% on investments of $25,000 to $59,999 and a simple interest rate of 5.75% on investments of $60,000 to $99,999 in 90 to 365-day GICs. How much more will an investor earn from a single $80,000, 180-day GIC than from two $40,000, 180-day GICs?

Free

Short Answer

Q 95Q 95

What will be the maturity value of $10,000 placed in a 90-day term deposit paying a simple interest rate of 3.25%?

Free

Short Answer

Q 96Q 96

What will be the maturity value of $15,000 placed in a 120-day term deposit paying a simple interest rate of 2.75%, if the term deposit proceeds are reinvested into another 120-day term deposit paying 3.5%?

Free

Short Answer

Q 97Q 97

For investments over $5,000, a bank quotes interest rates of 2.75% on 90-day GIC's, and 3.25% on 180-day GIC's. How much more simple interest will an investor earn by placing $8,000 in the 180-day GIC, rather than purchasing two consecutive 90-day GIC's?

Free

Short Answer

Q 98Q 98

The local bank pays simple interest calculated on the daily closing balance and paid monthly as follows: $0 to $5,000, 0.167%, $5,000 to $25,000, 0.25%, and over $25,000, 0.33%. Mrs. Singh had $3500 in her account on March 1. She deposited $2475 on March 5, withdrew $500 on March 12, and deposited $600 on March 15. Calculate the interest that she will be paid for the month of March.

Free

Short Answer

Q 99Q 99

Suppose that the current rates on 90-and 180-day GICs are 3.25% and 3.50% simple interest, respectively. An investor is weighing the alternatives of purchasing a 180-day GIC versus purchasing a 90-day GIC and then reinvesting its maturity value in a second 90-day GIC. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative?

Free

Short Answer

Q 100Q 100

Sam has a bank account that pays simple interest calculated on the daily closing balance and paid monthly as follows: $0 to $5,000, 0.2%, $5,000 to $10,000, 0.25%, and over $10,000, 0.30%. Sam had $17,000 in his account on April 1. He withdrew $5,000 on April 15, withdrew another $5,000 on April 20, and deposited $2,000 on April 25. Calculate the interest that he will be paid for the month of April.

Free

Short Answer

Q 101Q 101

An investment promises two payments of $500, 90 and 150 days from today. What price will an investor pay today if her required rate of return is 6.5% simple interest?

Free

Short Answer

Q 102Q 102

A contract requires payments of $750 in 100, and 200 days. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

Free

Short Answer

Q 103Q 103

Certificate A pays $1,200 in six months and $1,100 in one year. Certificate B pays $1,150 in three months and $1,150 in one year. If the current rate of return required is 6.75% simple interest, which option pays the most interest and by how much?

Free

Short Answer

Q 104Q 104

A contract requires payments of $1,000, $2,000, and $3,000 in 90, 120, and 150 days respectively, from today. What is the value of the contract today if the payments are discounted to yield a 6% simple interest rate of return?

Free

Short Answer

Q 105Q 105

An investment promises two payments of $1,500, 120 and 150 days from today at a rate of 7%. What price will an investor pay today if her required rate of return is 6.5% simple interest?

Free

Short Answer

Q 106Q 106

A contract requires payments of $1,700 in 50 and 100 days with interest at 6%. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

Free

Short Answer

Q 107Q 107

If the average rate of return on 168-day Government of Canada Treasury bills sold at the Tuesday auction was 2.35%, what price was paid for a $100,000 face value T- bill?

Free

Short Answer

Q 108Q 108

Calculate and compare the issue date prices of $100,000 face value commercial paper investments with 30, 60, and 90-day maturities, all priced to yield 5.5% simple interest.

Free

Essay

Q 109Q 109

Jake purchased a $100,000 182-day T-bill discounted to yield 5.5%. When he sold it 30 days later, yields had dropped to 5.0% simple interest. How much did Jake earn? (Taken from CIFP course materials.)

Free

Short Answer

Q 110Q 110

Debra paid $99,615 for a $100,000 T-bill with 30 days remaining until maturity. What (annual) rate of interest will she earn? (Taken from CIFP course materials.)

Free

Short Answer

Q 111Q 111

Lydia purchased a $100,000 150-day T-bill when the prevailing yield on T-bills was 4.5%. She sold the T-bill 60 days later when the prevailing yield was 4.2%. What simple interest rate did Lydia earn during the 60-day period? (Taken from CIFP course materials.)

Free

Short Answer

Q 112Q 112

Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date if the current market rate of return is 4.273% simple interest.

Free

Short Answer

Q 113Q 113

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. She then sold the T-bill to a client at a rate of interest of 2% simple interest. What profit did she realize on the sale?

Free

Short Answer

Q 114Q 114

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

Free

Short Answer

Q 115Q 115

Sixty-day commercial paper with face value $100,000 was issued by a company for $98,890.25. What simple interest rate of return will be realized if the investment is held until maturity?

Free

Short Answer

Q 116Q 116

A $100,000, 91-day Province of Ontario T-bill was purchased for $98,527.62. It was then sold for 4.8% simple interest. What profit was realized on the sale?

Free

Short Answer

Q 117Q 117

The purchaser of a 168 day T-bill with a face value of $100,000 paid $97,320.00 for it. After 60 days, interest rates had increased and she sold the T-bill for $97,833.95. What simple interest rate of return per annum did she realize while holding the T-bill?

Free

Short Answer

Q 118Q 118

Sam has a $10,000 personal line of credit. The interest rate is prime + 2%. On the last day of each month, a payment equal to the greater of $200 or 4% of the current balance (including the current month's accrued interest) is deducted from his chequing account. On July 2, he withdrew $4,000 and another $3,000 on July 15. The prime rate during July was 3%. Prepare a loan repayment schedule for the month of July.

Free

Essay

Q 119Q 119

Marcie has a $20,000 personal line of credit with an interest rate of prime + 3%. On the last day of each month, a payment equal to the greater of $500 or 4% of the current balance (including the current month's accrued interest) is deducted from her chequing account. On December 6, she withdrew $5,000. On January 15, she withdrew $12,000. The prime rate during this time was 3%. Prepare a loan repayment schedule up to and including February 28.

Free

Essay

Q 120Q 120

Sam borrowed $10,000 at prime + 2% on March 29. He agreed to payments of $2,000 on the first day of each month beginning May 1. The prime rate was 4% when Sam took out the loan. Construct a full repayment schedule showing details of the allocation of each payment to interest and principal. What is the final payment?

Free

Essay

Q 121Q 121

Beth borrowed $5,000 on demand from Canada Trust on February 23 for a Registered Retirement Savings Plan (RRSP) contribution. Because she used the loan proceeds to purchase Canada Trust's mutual funds for her RRSP, she received a special interest rate of prime plus 0.5%. Beth was required to make fixed monthly payments of $1,000 on the 15

^{th}of each month, beginning April 15. The prime rate was initially 4.75%, but it jumped to 5% effective June 15 and increased another 0.25% on July 31. (It was not a leap year.) Construct a repayment schedule showing the amount of each payment and the allocation of each payment to interest and principal.Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 124Q 124

Calculate the maturity value of a 120-day, $1,000 face value note dated September 5, 2016, earning interest at 4.75%.

Free

Short Answer

Free

Short Answer

Q 126Q 126

A 90-day non-interest-bearing promissory note issued on September 30, 2015 for $5,000 was discounted at 5.75% simple interest on November 5, 2015. What were the proceeds of the note?

Free

Short Answer

Q 127Q 127

A six-month non-interest-bearing promissory note issued on April 11, 2015, for $4,000 was discounted at 6.25% simple interest on September 2, 2015. What were the proceeds of the note?

Free

Short Answer

Q 128Q 128

A 90-day promissory note dated June 30 for $2,000 at an interest rate of 5.5% simple interest was sold on July 15, discounted at 8%. What were the proceeds of the note on July 15?

Free

Short Answer