7. Which of the following is a FALSE statement? a. The EAR is generally less than the nominal or quoted rate of interest. b. Future values decrease with decreases in interest rates c. Future values and interest rates move in the same direction. d. Compounding means earning interest on interest. 8. You have borrowed $10,000 to pay off your Spring Break trips. You plan to make monthly payments over a 10-year period. If the loan's interest rate is 10% compounded monthly, how much interest will you pay over the life of the loan? a $3,753 b. $2,195 c. $5,856 d. $6,987 9. You sold 100 shares of stock today for $30 per share that you paid $20 for 6 years ago. Determine the average annual rate of return on your investment, assuming the stock paid no dividends. a 7% b. 150% c. 8.33% d. 25% 10. You have just borrowed $30,000 to buy a new car. The loan agreement calls for 48 monthly payments of $704.55 ench to begin one month from today. If the interest is compounded monthly, then what is the effective annual rate (EAR) on this loan? a 7.54% b. 6.17% c. 7.06% d. 6.00% e. 6.67% 11. What is the rate of return on an investment if you lend $1,000 and are repaid $1,254.70 two years later? a 4% b.18% c. 1296 d. 25% e. 695 12. A four-year annuity of $1,000 annual payments at the beginning of each year, with a 10% interest rate is worth how much today? a. $3,486,85 b. $3169.87 c. $2,914.67 d. none of the above. Page 3 of 12