• 2021-04-14
    Alpha Bank pays interest of 4 percent compoundedannually. Beta Bank pays 4 percent simple interest. Whichone of the following statements is true if you invest $1,000 in each bank forfive years?
  • d. Alpha Bank will pay you $16.65 of interest on interest.

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    • 0

      In which of the following situations would you prefer to be making a loan? A: The interest rate is 9 percent and the expected inflation rate is 7 percent. B: The interest rate is 4 percent and the expected inflation rate is 1 percent. C: The interest rate is 13 percent and the expected inflation rate is 15 percent. D: The interest rate is 25 percent and the expected inflation rate is 50 percent.

    • 1

      Western Bank offers you a $21,000, 9-year term loan at 8 percent annual interest. What is the amount of your annual loan payment?

    • 2

      Decide whether the following statements are true and false.1. A bank is a financial institution which deals with money transactions. In a bank, you can borrow money in the form of a bank loan, or you can put your money in a bank, in other words, deposit money.

    • 3

      You have $5,000 you want to invest for the next 45 years. You are offered an investment plan that will pay you 6 percent per year for the next 15 years and 10 percent per year for the last 30 years. How much will you have at the end of the 45 years? How much will you have if the investment plan pays you 10 percent per year for the first 15 years and 6 percent per year for the next 30 years?

    • 4

      If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest? A: 10.0 percent B: 4.1 percent C: 5.8 percent D: 14.0 percent