Question 1

A contract requires payments of $750 in 100, and 200 days. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

Accepted Answer

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Question 2

Debra paid $99,615 for a $100,000 T-bill with 30 days remaining until maturity. What (annual) rate of interest will she earn? (Taken from CIFP course materials.)

Accepted Answer

The answer of Debra paid $99,615 for a $100,000 T-bill...

Question 3

A contract requires payments of $1,000, $2,000, and $3,000 in 90, 120, and 150 days respectively, from today. What is the value of the contract today if the payments are discounted to yield a 6% simple interest rate of return?

Accepted Answer

The answer of A contract requires payments of $1,000, $2,000,...

Question 4

An investment promises two payments of $500, 90 and 150 days from today. What price will an investor pay today if her required rate of return is 6.5% simple interest?

Accepted Answer

The answer of An investment promises two payments of $500,...

Question 5

Sam has a $10,000 personal line of credit. The interest rate is prime + 2%. On the last day of each month, a payment equal to the greater of $200 or 4% of the current balance (including the current month's accrued interest) is deducted from his chequing account. On July 2, he withdrew $4,000 and another $3,000 on July 15. The prime rate during July was 3%. Prepare a loan repayment schedule for the month of July.

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The answer of Sam has a $10,000 personal line of...

Question 6

Calculate and compare the issue date prices of $100,000 face value commercial paper investments with 30, 60, and 90-day maturities, all priced to yield 5.5% simple interest.

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Question 7

If the average rate of return on 168-day Government of Canada Treasury bills sold at the Tuesday auction was 2.35%, what price was paid for a $100,000 face value T- bill?

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The answer of If the average rate of return on...

Question 8

Lydia purchased a $100,000 150-day T-bill when the prevailing yield on T-bills was 4.5%. She sold the T-bill 60 days later when the prevailing yield was 4.2%. What simple interest rate did Lydia earn during the 60-day period? (Taken from CIFP course materials.)

Accepted Answer

The answer of Lydia purchased a $100,000 150-day T-bill when...

Question 9

Sixty-day commercial paper with face value $100,000 was issued by a company for $98,890.25. What simple interest rate of return will be realized if the investment is held until maturity?

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The answer of Sixty-day commercial paper with face value $100,000...

Question 10

Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date if the current market rate of return is 4.273% simple interest.

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The answer of Calculate the price of a $50,000, 91-day...

Question 11

Sam borrowed $10,000 at prime + 2% on March 29. He agreed to payments of $2,000 on the first day of each month beginning May 1. The prime rate was 4% when Sam took out the loan. Construct a full repayment schedule showing details of the allocation of each payment to interest and principal. What is the final payment?

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The answer of Sam borrowed $10,000 at prime + 2%...

Question 12

Jake purchased a $100,000 182-day T-bill discounted to yield 5.5%. When he sold it 30 days later, yields had dropped to 5.0% simple interest. How much did Jake earn? (Taken from CIFP course materials.)

Accepted Answer

The answer of Jake purchased a $100,000 182-day T-bill discounted...

Question 13

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

Accepted Answer

The answer of The purchaser of a 168-day T-bill with...

Question 14

The purchaser of a 168 day T-bill with a face value of $100,000 paid $97,320.00 for it. After 60 days, interest rates had increased and she sold the T-bill for $97,833.95. What simple interest rate of return per annum did she realize while holding the T-bill?

Accepted Answer

The answer of The purchaser of a 168 day T-bill...

Question 15

A $100,000, 91-day Province of Ontario T-bill was purchased for $98,527.62. It was then sold for 4.8% simple interest. What profit was realized on the sale?

Accepted Answer

The answer of A $100,000, 91-day Province of Ontario T-bill...

Question 16

Marcie has a $20,000 personal line of credit with an interest rate of prime + 3%. On the last day of each month, a payment equal to the greater of $500 or 4% of the current balance (including the current month's accrued interest) is deducted from her chequing account. On December 6, she withdrew $5,000. On January 15, she withdrew $12,000. The prime rate during this time was 3%. Prepare a loan repayment schedule up to and including February 28.

Accepted Answer

The answer of Marcie has a $20,000 personal line of...

Question 17

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. She then sold the T-bill to a client at a rate of interest of 2% simple interest. What profit did she realize on the sale?

Accepted Answer

The answer of The purchaser of a 168-day T-bill with...

Question 18

Certificate A pays $1,200 in six months and $1,100 in one year. Certificate B pays $1,150 in three months and $1,150 in one year. If the current rate of return required is 6.75% simple interest, which option pays the most interest and by how much?

Accepted Answer

The answer of Certificate A pays $1,200 in six months...

Question 19

An investment promises two payments of $1,500, 120 and 150 days from today at a rate of 7%. What price will an investor pay today if her required rate of return is 6.5% simple interest?

Accepted Answer

The answer of An investment promises two payments of $1,500,...

Question 20

A contract requires payments of $1,700 in 50 and 100 days with interest at 6%. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

Accepted Answer

The answer of A contract requires payments of $1,700 in...

Quiz 7: Applications of Simple Interest

A contract requires payments of $750 in 100, and 200 days. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

Debra paid $99,615 for a $100,000 T-bill with 30 days remaining until maturity. What (annual) rate of interest will she earn? (Taken from CIFP course materials.)

A contract requires payments of $1,000, $2,000, and $3,000 in 90, 120, and 150 days respectively, from today. What is the value of the contract today if the payments are discounted to yield a 6% simple interest rate of return?

An investment promises two payments of $500, 90 and 150 days from today. What price will an investor pay today if her required rate of return is 6.5% simple interest?

Calculate and compare the issue date prices of $100,000 face value commercial paper investments with 30, 60, and 90-day maturities, all priced to yield 5.5% simple interest.

If the average rate of return on 168-day Government of Canada Treasury bills sold at the Tuesday auction was 2.35%, what price was paid for a $100,000 face value T- bill?

Lydia purchased a $100,000 150-day T-bill when the prevailing yield on T-bills was 4.5%. She sold the T-bill 60 days later when the prevailing yield was 4.2%. What simple interest rate did Lydia earn during the 60-day period? (Taken from CIFP course materials.)

Sixty-day commercial paper with face value $100,000 was issued by a company for $98,890.25. What simple interest rate of return will be realized if the investment is held until maturity?

Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date if the current market rate of return is 4.273% simple interest.

Jake purchased a $100,000 182-day T-bill discounted to yield 5.5%. When he sold it 30 days later, yields had dropped to 5.0% simple interest. How much did Jake earn? (Taken from CIFP course materials.)

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

The purchaser of a 168 day T-bill with a face value of $100,000 paid $97,320.00 for it. After 60 days, interest rates had increased and she sold the T-bill for $97,833.95. What simple interest rate of return per annum did she realize while holding the T-bill?

A $100,000, 91-day Province of Ontario T-bill was purchased for $98,527.62. It was then sold for 4.8% simple interest. What profit was realized on the sale?

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. She then sold the T-bill to a client at a rate of interest of 2% simple interest. What profit did she realize on the sale?

Certificate A pays $1,200 in six months and $1,100 in one year. Certificate B pays $1,150 in three months and $1,150 in one year. If the current rate of return required is 6.75% simple interest, which option pays the most interest and by how much?

An investment promises two payments of $1,500, 120 and 150 days from today at a rate of 7%. What price will an investor pay today if her required rate of return is 6.5% simple interest?

A contract requires payments of $1,700 in 50 and 100 days with interest at 6%. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?