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Home > Mathematics > General Mathematics > Preliminary Course > Financial Mathematics > FM2: Investing money > Quick quiz: A sample of multiple choice questions for this topic.

FM2

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1. When using the simple interest formula I = Prn for an investment with an interest rate of 8.2%, the value for r in the formula is:

2. The graph of the amount of simple interest earned over a period of several years should look like:

3. An interest rate is given as 4.8% per annum. This is the same as:

4. The formula for compound interest is A = P(1 + r)ⁿ.

For an investment of $5000, over a period of 2 years with a monthly interest rate of 0.8%, the calculation should be:

5. The graph for an investment of $1000 at a compound interest rate of 5% is drawn with a dotted line. On the same graph a solid line represents the same investment placed at a compound interest rate of 3%.

Which of the graphs represent this?

6. Deeley Development shares paid a dividend yield of 5%.

If you owned 700 shares in Deeley Development, with a market value of $3.80, how much should your dividend be?

7. The graph below shows the share prices for a company over the last several years.

Estimate the price for the following year.

graph of share prices 1992-2002

Future value of an annuity of $1
Periods	2%	4%	8%	10%	12%
5	5.2040	5.4163	5.8666	6.1051	6.3528
10	10.950	12.006	14.487	15.937	17.549
15	17.293	20.024	27.152	31.772	37.280

Option 1: Invest $1270 every six months at 4% per half-year.
Option 2: Invest $2540 every year at 8% per year.

Which option would produce the most money after 5 years?

9. As a result of inflation the value of a beach house increased by 3.5% each of the last two years. It was bought for $190 000 two years ago. Calculate the new anticipated value.

10. Jo inherited an antique tie pin. It was valued at $1350. Each year its value appreciated by 5%.

Approximately how much was the tie pin expected to be worth 5 years later.