PERSONAL FINANCE
(Review Questions)
1.
For each of the following, choose the best answer:
a)
Which annual interest rate will most likely be paid by a bank to customers with money in
a savings account?
A.
b)
C.
16.9%
D.
28.8%
buying a GIC
buying shares in an oil company
B.
D.
buying a new car
buying a hectare of land
asset
depreciation
B.
D.
investment
deflation
annual
B.
quarterly
C.
monthly
D.
daily
65L/100km
15.2L/100km
B.
D.
6.58L/100km
9.88L/100km
insurance premium
license fee
B.
D.
lease payment
all of the above
insurance premium
repairs and maintenance
B.
D.
loan payment
license fee
a GIC from a bank
a daily interest savings account
B.
D.
a stock in a new mining company
a stock in an oil company
$8.95
B.
$15.75
C.
$21.55
D.
$24.70
A credit card statement shows a grace period of 12 days. It was issued on May 12th. What
is the latest date the payment can be made so no interest is charged?
A.
2.
7.5%
Jeanne pays $8.95 per month for up to 15 transactions on her account, plus $1.05 for each
additional transaction. How much will Jeanne pay in transaction fees in a month where
she makes 27 transactions?
A.
k)
B.
Which investment could be considered high risk?
A.
C.
j)
1.0%
Which is an example of a variable cost for a vehicle?
A.
C.
i)
28.8%
Which is an example of a fixed cost for a vehicle?
A.
C.
h)
D.
A car travels 65km on 9.88L of fuel. Which rate represents its fuel efficiency?
A.
C.
g)
16.9%
An investment is made at a fixed annual interest rate for 3 years. Which compounding
period will yield the greatest return?
A.
f)
C.
Which term is used to describe the amount by which a car loses its value over time?
A.
C.
e)
7.5%
Which should not be considered an investment?
A.
C.
d)
B.
Which annual interest rate will most likely be paid by a bank to customers with money
owing on a credit card account?
A.
c)
1.0%
May 12th
B.
May 23rd
C.
May 24th
D.
June 12th
Use the compound interest formula to calculate the interest earned on $425 in the month of
January in a daily interest savings account that pays 3.5% interest per year.
P=
i=
n=
A = P(1 + i)n
3.
4.
5.
6.
7.
8.
Gail plans to invest $4000 in a mutual fund with an expected rate of return of 14.38% each year
for the next 4 years. The investment company charges Gail a 2.25% management fee. Calculate
the value of Gail’s investment after 4 years.
N=
____________
FV =
____________
I=
____________
C/Y =
____________
PV =
____________
P/Y =
____________
PMT =
____________
 the value is ______________________.
Clare’s January credit card statement shows a balance of $1586. Payment is due on January
12th. The minimum payment is the greater of $25 or 3.5% of the balance. Clare made the
minimum payment of January 17th. The interest rate charged is 18.6% annually.
a)
Determine the amount of the minimum payment that Clare made on January 17th.
b)
Determine the amount of interest that Clare will be charged up to her late payment on
January 17th.
N=
____________
FV =
____________
I=
____________
C/Y =
____________
PV =
____________
P/Y =
____________
PMT =
____________
 the interest is _____________________.
Dave leased a sports car for 3 years. He made a down payment of $3000 and pays $1288.42
each month.
a)
Determine the amount that Dave will spend over the term of the lease.
b)
Determine the average cost per month over the term of the lease.
Determine the monthly payment on a 5–year car loan of $27250 at 8.4% compounded monthly.
N=
____________
FV =
____________
I=
____________
C/Y =
____________
PV =
____________
P/Y =
____________
PMT =
____________
 the payment is _____________________.
The fuel efficiency rating of the car is 10.7L/100km.
a)
Determine the amount of gas that would be used on a 375km trip.
b)
If gas costs $1.10/L, determine the cost of the fuel for this trip.
Troy purchased a new car for $27550. One year later it was valued at $22591.
Determine the depreciation rate in the first year.