If you deposit $202.50 today into an account paying 6% per year simple interest, how much interest will you have earned in 2 years?
Answer(s): C
Since this is a simple interest question, the formula is I=PRT, with T here being 2, since the timeframe is 2 years. On the BAII Plus, press 202.50 x 0.06 x 2 = to see the answer. On the HP12C, press 202.50 ENTER 0.06 x 2 x to see the answer. Since the question asks for the amount of interest earned, the original deposit should not be added to this value.
If 68% of the observations on a normal distribution fall between -20 and + 60, the mean and the standard deviation of the distribution are:
Answer(s): A
Since the normal distribution is symmetrical about the mean, the mean is equal to (-20 + 60)/2 = 20. Further, for a normal distribution, 68% of the observations lie within one standard deviation of the mean. Therefore, the standard deviation equals 60-20 = 40.
If you owe a debt of $3,000 today and also owe $5,000 in 24 months, what single payment could you make 15 months from today that would pay off both of these debts, if interest is assessed at 8% per year, compounded monthly?
To solve this question, set the problem up as the sum of two compound interest calculations. Move the $3,000 from today over to month 15 and add it to the $5,000 brought back from month 24 to month 15. On the BAII Plus, press 15 N, 8 divide 12 = I/Y, 3000 PV, 0 PMT, CPT FV, which yields $3,314.41. Then press STO 1. Then press 9 N, 5000 FV, CPT PV, which yields $4,709.76. Finally press + RCL 1 = to see the answer. On the HP12C, press 15 n, 8 ENTER 12 divide i, 3000 PV, 0 PMT, FV. Then press STO 1. Then press 9 n, 5000 FV, PV. Finally press RCL 1 + to see the answer. Make sure the BAII Plus has the value of P/Y set to 1.
What monthly payment is required over the next 60 months to pay off a $12,500 debt today, if interest is charged at 12% per year, compounded monthly?
Answer(s): E
On the BAII Plus, press 60 N, 12 divide 12 = I/Y, 12500 PV, 0 FV, CPT PMT. On the HP12C, press 60 n, 12 ENTER 12 divide i, 12500 PV, 0 FV, PMT. Make sure the BAII Plus has the P/Y value set to 1. Note that the answer will be displayed as a negative number.
What is the Net Present Value of this series of annual cash flows using an interest rate of 12% per year: Year0: <$15,000>, Year 1: $8,000, Year 2: $8,000, Year 3: $1,000, Year 4: $4,000? (Note that the <> are used to indicate a negative number).
On the BAII Plus, press CF 2nd CLRWork 15000 +/- ENTER DownArrow 8000 ENTER DownArrow DownArrow 8000 ENTER DownArrow DownArrow 1000 ENTER DownArrow DownArrow 4000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 12 ENTER DownArrow CPT. On the HP12C, press these keys: 15000 CHS BlueShift CFo 8000 BlueShift CFj 8000 BlueShift CFj 1000 BlueShift CFj 4000 BlueShift CFj. Then press 12 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure the BAII Plus has the P/Y value set to 1.
Post your Comments and Discuss Test Prep CFA-Level-I exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CFA-Level-I content, but please register or login to continue.