Self-study Quiz Introduction to Financial Math Attempt review Week 2 PDF

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Self study quiz questions for topic 2 of the weekly topics for foundation of finance bff1001. weekly quiz based on lecture and readings....

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07/05/2021

Self-study Quiz: Introduction to Financial Math: Attempt review

BFF1001 - Foundations of Finance - S1 2021 Dashboard /

/ BFF1001 - S1 2021 / Topic 2: Introduction to Valuation & Financial Math

/ Self-study Quiz: Introduction to Financial Math

Print friendly format Question 1

Which of the following does not affect the value of an asset? Select one: a. The advertised expected rate of return of the asset

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b. The risk of future cash flows c. The size of future cash flows d. The investor's required rate of return for the asset e. The frequency/timing of future cash flows

Your answer is correct. The correct answer is: The advertised expected rate of return of the asset

Question 2

You will receive $1,200 in 3 years. What is the PV of this cash flow if your discount rate is 5%?

Use the appropriate PV formula to solve. Students can also attempt to self-study how to use the HP financial calculator to check their solution. Select one: a. $1,063.60 b. $1,026.60 c. $1,046.60 https://lms.monash.edu/mod/quiz/review.php?attempt=18772958&cmid=8138156

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07/05/2021

Self-study Quiz: Introduction to Financial Math: Attempt review

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d. $1,036.60

Your answer is correct. The correct answer is: $1,036.60

Question 3

How many payments per annum would there be for fortnightly cash flows? Select one: a. 27 b. 12

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c. 26 d. 52

Your answer is correct. The correct answer is: 26

Question 4

You invest in a 5 year term deposit which calculates and pays interest every month. How many payments of interest will you receive?  Answer:

60

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The correct answer is: 60

Question 5

Your enter into a new mobile phone plan which involves monthly payments for 2 years. When working out the PV cost of these payments, how many payments are you making? Answer:

24

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The correct answer is: 24

Q

i

6

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Self-study Quiz: Introduction to Financial Math: Attempt review

Question 6

The interest rate or discount rate applied to cash flow in financial math ( i) is specific to the frequency of payment. For example, you invest in a 5 term deposit which calculates and pays interest every year. The interest rate earned is 3% p.a. (per annum). To identify the iused in valuation... 1. Identify the frequency of payment = every year. 2. Identify the interest rate for each payment = 3% per annum. = 3%. 3. So thei used to calculate the FV of the term deposit would be FV = PV ( 1 + 0.03) 5 Let us take another example,you invest in a 5 term deposit which calculates and pays interest semi-annually. The interest rate earned is 3% p.a. 1. Identify the frequency of payment = twice every year. 2. Identify the interest rate for each payment = 3%/2 = 1.5% 3. So thei used to calculate the FV of the term deposit would be FV = PV ( 1 + 0.01.5) 10 Let us now apply this. You invest in a 5 term deposit which calculates and pays interest monthly. The interest rate earned is 3% p.a. What is the interest rate used for each payment?

(enter your answer to 2 decimal places without the %, e.g. if you answer is 0.513%, enter in 0.51) Answer:

0.25

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The correct answer is: 0.25

Question 7

You invest in a 3 year term deposit which calculates and pays interest quarterly. The interest rate for the term deposit is 4% p.a. What is the i used to value each payment?

Hint: make sure you understand what quarterly payments are. (enter your answer as an integer without the %, e.g. if you answer is 5%, enter in 5)  Answer:

1

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The correct answer is: 1

Question 8

You buy a mobile phone under a plan which requires monthly payments for 2 years. With a discount rate of 24% p.a., what is iused for each payment?

(enter your answer as an integer without the %, e.g. if you answer is 5%, enter in 5)

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Answer:

Self-study Quiz: Introduction to Financial Math: Attempt review

2

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The correct answer is: 2

Question 9

You invest $100 today in a fund that earns 5% p.a. interest, paid annually and re-invested when paid. What is the future value in 4 years time?

Use the appropriate FV formula to solve. Students can also attempt to self-study how to use the HP financial calculator to check their solution. Select one: a. $121.55

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b. $112.55 c. $120.55 d. $155.21

Your answer is correct. The correct answer is: $121.55

Question 10

Which of the following assets is the best performing? Select one: a. Asset C: Rate of return 6%

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b. Asset A: Yield 5% c. Asset B: Return 4.5% d. Asset D: Discount rate 7%

Your answer is correct. The correct answer is: Asset C: Rate of return 6%

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