Finance: Annuity Review Questions
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What are the monthly mortgage payments on a 30-year loan for
$150,000 at 12%?
You have two assets in your portfolio: a stock mutual fund with a
beta of 1.20 and U.S. Treasury securities (assume they are risk free).
What is the beta for your portfolio if 40% of your funds are invested
in the treasury securities?
Find the beta of a portfolio of three stocks. One third of the portfolio
is invested in each of the three stocks. The stocks and their betas
are as follows: Mallmart - beta 1.10, Peak Power - beta 0.85 and
MicroEase - beta 1.40
What is an investment worth that promises to return $10,000 per
year, given a required rate of return of 15%, if the benefits are
expected for 10 years?
What will a deposit of $4,500 at 12% compounded monthly be worth
at the end of 10 years?
How long does it take for $5,000 to grow into $6,742.44 at
10% compounded quarterly?
How much must you deposit at the end of each year in an account
that pays a annual rate of 20 percent, if at the end of 5 years you
want $10,000 in the account?
What interest rate would you need to get to have an annuity of
$7,500 per year accumulate to $279,600 in 15 years
What would you pay for an annuity of $2,000 paid every six months
for 12 years if you could invest your money elsewhere at 10%
compounded semiannually?
Thirty years ago Jesse Jones bought 10 acres of land for $1,000
per acre in what is now downtown Houston. If this land grew in
value at an 8 percent per annum rate, what is it worth today?
A $10,000 car loan has payments of $361.52 per month for three
years. What is the interest rate? Assume monthly compounding
and give the answer in terms of an annual rate.
Find the present value of $1,000 to be received at the end of 2 years
at 12% compounded quarterly?
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Solution Summary
The solution includes a word and an excel sheet that show in steps how to calculate the payments on a loan, the beta of a portfolio, present and future values of investments
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1)
Periods = 360 (30 years times 12 months)
Monthly Interest Rate = 12% divided by 12 months = 1%
C = $1,542.92
2 & 3)
To calculate the Beta of a portfolio:
(security A × Weight )+ (securityB × weight)
4)
5)
t = ...
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