Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Mark is investing in an IRA that provides a 15% APR interest compounded
monthly. What is his effective rate of interest at the end of each month?
a. | 0.125% | c. | 1.25% | b. | 0.80% | d. | 15.0% |
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2.
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TJ is investing in an IRA that provides a 12% APR interest compounded
monthly.
TJ deposits $232 into his IRA on the
last day of January, $275 on the last day of February, and $206 on the last day of
March. Using the ledger above, how much should TJ have in his IRA on the first day of
April?
a. | $703.12 | c. | $734.39 | b. | $720.41 | d. | $798.56 |
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3.
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 Jay
plans to invest in an annuity and deposits $450 at the end of each month from age 25 to age 55.
If the investment yields 11% annually and is compounded monthly, how much will the investment be
worth when Jay is 55 years old?
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a. | $179,820 | c. | $1,262,034 | b. | $191,826 | d. | $2,191,601 |
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4.
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 TJ
wants to be a millionaire in the next 15 years. He has an opportunity to invest in an annuity
that has an APR of 15% compounded monthly. How much must he invest each month to meet his
goal?
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a. | $986.76 per month | c. | $4,722.22 per month | b. | $1,495.87 per month | d. | $5,555.56 per
month |
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