Question 1

Calculate the missing interest rate (to the nearest 0.01%)

Accepted Answer

The answer of Calculate the missing interest rate (to the...

Question 2

At the end of 2012, the Trans IMS Canadian Growth Fund had one of the worst 10-year compound annual returns of any Canadian diversified equity mutual fund. The fund's annual returns in successive years from 2000 to 2009 inclusive were -12.8%, -38.3%, -24.1%, 25.4%, 9.2%, 18.6%, 12.0%, -0.2%, -38.5%, and 15.6%, respectively. For 3-year, 5-year, and 10-year periods ended December 31, 2012, what was the fund's equivalent annually compounded return?

Accepted Answer

The answer of At the end of 2012, the Trans...

Question 3

Kristina was earning $10.00 an hour four years ago. Today, she earns $13.50 an hour. At what equivalent compound annual rate has her salary grown over the four years?

Accepted Answer

The answer of Kristina was earning $10.00 an hour four...

Question 4

A $6,000, three-year promissory note bearing interest at 11% compounded semiannually was purchased 15 months into its term for $6,854.12. What monthly compounded discount rate was used in pricing the note?

Accepted Answer

The answer of A $6,000, three-year promissory note bearing interest...

Question 5

The proceeds from the sale of a $3500 four-year promissory note bearing interest at 5% compounded quarterly were $3612.31. The note was discounted to yield 6.8% compounded semiannually. When was the note sold?

Accepted Answer

The answer of The proceeds from the sale of a...

Question 6

An investor's portfolio increased in value from $35,645 to $54,230 over a six-year period. At the same time, the Consumer Price Index rose by 26.5%. What was the portfolio's annually compounded real rate of return?

Accepted Answer

The answer of An investor's portfolio increased in value from...

Question 7

Over a five-year period, Hardip's $2,000 investment grew to $2675. At the same time, the CPI increased from 106.1 to 109.1. What was Hardip's real compound rate of return?

Accepted Answer

The answer of Over a five-year period, Hardip's $2,000 investment...

Question 8

At the end of 2012, the RBC Canadian Dividend Fund was the largest equity mutual fund in Canada. The aggregate market value of its holdings at the end of 2012 was $9.995 billion. The fund's annual returns in successive years from 2003 to 2012 inclusive were 28.3%, 4.4%, -0.5%, 23.5%, 12.9%, 21.1%, 15.1%, 3.0% - 27.0%, and 27.3% respectively. For the 3-year, 5-year, and 10-year periods ending December 31, 2012, what were the fund's equivalent annually compounded returns?

Accepted Answer

The answer of At the end of 2012, the RBC...

Question 9

How long will it take an investment to double in value if it earns 4.5% compounded quarterly?

Accepted Answer

The answer of How long will it take an investment...

Question 10

For three successive years, an investment paid annual rates of return of 5.8%, 3.4%, and -2.25%. Calculate the funds equivalent annually compounded rate of return over the three years.

Accepted Answer

The answer of For three successive years, an investment paid...

Question 11

Advances in technology have improved the rate of production of widgets over the last 10 years and the number of plant workers required has declined by 25%. What is the equivalent annual rate of decrease during the period?

Accepted Answer

The answer of Advances in technology have improved the rate...

Question 12

A company's sales dropped 10% per year for 5 years.
a) What annual rate of sales growth for the subsequent 5 years would return the sales to the original level?
b) To the nearest month, how long would it take for sales to return to the original level if they increased at 10% per year?

Accepted Answer

The answer of A company's sales dropped 10% per year...

Question 13

A few years ago, Larissa invested $1500 at 3.75% compounded quarterly. If the investment is worth $1693.46 today, how many years ago did Larissa make the investment?

Accepted Answer

The answer of A few years ago, Larissa invested $1500...

Question 14

A $5,000 investment was purchased for $4220.50. The bond paid interest at a rate of 3.8% compounded semi-annually until the maturity date. What was the term of the investment?

Accepted Answer

The answer of A $5,000 investment was purchased for $4220.50....

Question 15

Rounded to the nearest month, how long will it take money to lose 25% of its purchasing power if the annual rate of inflation is:
a) 2%
b) 4%

Accepted Answer

The answer of Rounded to the nearest month, how long...

Question 16

Rounded to the nearest quarter year, how long will it take an investment to quadruple if it earns:
a) 8% compounded annually?
b) 9% compounded semiannually?

Accepted Answer

The answer of Rounded to the nearest quarter year, how...

Question 17

In June of 2012, AIC Limited published full-page advertisements focused on the fact that its AIC Advantage Mutual Fund was Canada's "Best Performing Canadian Equity Fund over the 20 years" ending May 31, 2012. The equivalent annual rate of return during the 20 years was 11.9% compared to 9.9% for the benchmark S&P/TSX Composite Total Return Index. But the advertisement failed to point out that during the second half of that 20-year period, the fund's 9.4% compounded annual return was actually less than the 10.2% growth rate for the S&P/TSX Composite Total Return Index. Furthermore, in the final 5 years of the 20-year period, the fund's 2.4% annual rate of return was far below the index's 9.5% annual growth. The Advantage Fund's five-year performance was even less than the median performance of all Canadian equity mutual funds. In short, AIC was still trying to capitalize on the initial 10 years of truly outstanding performance, even though the Advantage Fund's subsequent 10 years' performance was at best mediocre.
a) What would $10,000 invested in the AIC Advantage Fund on May 31, 1992 have grown to after 20 years?
b) What was this investment worth after the first 10 years?
c) What compound annual rate of return did the AIC Advantage Fund earn during the first 10 years of the 20-year period?
d) What was the overall percent increase in the value of an investment in the AIC Advantage Fund during: (i) The first 10 years?
(ii) The second 10 years?

Accepted Answer

The answer of In June of 2012, AIC Limited published...

Question 18

At the end of 2009, the Industrial Alliance (IA) Group Dividends Fund had the best 10-year compound annual return of any Canadian diversified equity mutual fund. During the 10-year period, this fund invested primarily in the shares of large Canadian companies. The fund's annual returns in successive years from 2000 to 2009 inclusive were 33.5%, 9.2%, 2.2%, 25.8%, 17.9%, 27.9%, 19.7%, 6.3%, -26.0%, and 21.5%, respectively. For 3-year, 5-year, and 10-year periods ended December 31, 2009, what was the fund's equivalent annual compounded return?

Accepted Answer

The answer of At the end of 2009, the Industrial...

Question 19

An investment earned 6% compounded semiannually for two years and 8% compounded annually for the next three years. What was the equivalent annually compounded rate of return for the entire five-year period?

Accepted Answer

The answer of An investment earned 6% compounded semiannually for...

Question 20

Rounded to the nearest month, how long before a scheduled payment of $10,000 would a payment of $5,000 be an economically equivalent alternative? Assume money is worth 5% compounded annually.

Accepted Answer