$25,000 is put in a savings account paying interest of 4% compounded annually. To calculate the balance in the account at the end of 5 years, you would use which table: a) Present Value of 1 b) Present Value of an annuity c) Future Value of 1 2) Future Value of an annuity All of the above. d) e) Which is true about a $1,000 ten year bond that pays 8% semiannually? 3) Unless the issuer defaults (doesn't pay) buyers could risk losing interest, but the value cannot drop below $1,000 If market interest rates drop to 6% the value of the bond should increase. d) It would sell for more if it were annual. a) The price goes down over time since b) fewer interest payments remain. e) If market interest rates drop to 6% the c) payments would be $30 twice per year Compare the above bond to a $1,000 twenty year bond that pays 8% semiannually? The 20 yr. bond: a) should always be worth more. b) should always be worth less c) is more volatile (changes more in value) 4) has a lower present value if rates has a higher present value if rates 896. 8%. d) e) with changes in market interest rates. Dick and Jane Smith invested $10,000 in a savings account paying 5% annual interest when their son, Jason, was born. They also deposited $500 on each of his birthdays until he was 20 (including his 20th birthday). To the closest dollar, how much was in the savings account on his 20th birthday (after the last deposit)? a) $43,066. b) $53,066. 5) c) $30,000 d) $26,533