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Free CFA-Level-I Exam Braindumps (page: 280)

Page 279 of 991
PDF with 3963 Questions

What annual simple interest rate would cause a $105 deposit to grow to $125 in 15 months?

  1. 7.89%
  2. 15.24%
  3. 20%
  4. 13.14%
  5. 14.17%

Answer(s): B

Explanation:

To solve this question, we have to rearrange the simple interest formula, I=PRT so that the R is by itself. Note that the I (interest) is equal to 20 (125 - 105). Note also that the time component T of the formula is 15/12. On the BAII Plus, press 20 divide 105 divide 15 x 12 = to see the answer. On the HP12C, press 20 ENTER 105 divide 15 divide 12 x to see the answer.



How many monthly payments of $50, beginning next month, are needed to pay off a debt of $700, if interest accrues at 8% per year, compounded monthly?

  1. 18.60
  2. No solution/Error
  3. 11.48
  4. 12.80
  5. 14.75

Answer(s): E

Explanation:

On the BAII Plus, press 8 divide 12 = I/Y, 700 PV, 50 +/- PMT, 0 FV, CPT N. On the HP12C, press 8 ENTER 12 divide i, 700 PV, 50 CHS PMT, 0 FV, n. Note that the HP12C will display 15 as the answer. Make sure the BAII Plus has the P/Y value set to 1.



What quarterly deposit do you need to make each quarter, starting next quarter, over the next 10 years in order to have a balance of $15,000 in your account, assuming the account starts with $1,000 in it and that the interest rate is 6% per year, compounded quarterly?

  1. $242.98
  2. $1.23
  3. $1,293.08
  4. $203.41
  5. $30.46

Answer(s): A

Explanation:

There are 40 quarters in 10 years (10 x 4 =). The payment to be solved for as well as the original $1,000 balance can be viewed as deposits into the account and hence given the same sign. The $15,000 amount at the end of the timeframe should be of the opposite sign. On the BAII Plus, press 40 N, 6 divide 4 = I/Y, 1000 PV, 15000 +/- FV, CPT PMT. On the HP12C, press 40 n, 6 ENTER 4 divide i, 1000 PV, 15000 CHS FV, PMT.
Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.



What is the Net Present Value of this series of annual cash flows at an interest rate of 20% per year: Year 0:
<$15,000>, Year 1: $2,000, Year 2: $0, Year 3: $15,000, Year 4 $0, Year 5 $18,000? (Note that the <> are used to indicate a negative number).

  1. $2,947.49>
  2. $2,581.02
  3. <$77.41>
  4. $2,442.21
  5. $2,414.37

Answer(s): B

Explanation:

On the BAII Plus, press CF 2nd CLRWork 15000 +/- ENTER DownArrow 2000 ENTER DownArrow DownArrow 0 ENTER DownArrow DownArrow 15000 ENTER DownArrow DownArrow 0 ENTER DownArrow DownArrow 18000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 20 ENTER DownArrow CPT. On the HP12C, press these keys: 15000 CHS BlueShift CFo 2000 BlueShift CFj 0 BlueShift CFj 15000 BlueShift CFj 0 BlueShift CFj 18000 BlueShift CFj. Then press 20 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.






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