Question
Q1/ You deposit $1 into a bank account which credits interest at a nominal interest rate of 10% per annum, convertible semiannually. At the same
Q1/ You deposit $1 into a bank account which credits interest at a nominal interest rate of 10% per annum, convertible semiannually. At the same time, your classmate deposits $1000 into a different bank account, which is credited with simple interest.
At the end of 5 years, the forces of interest on the two accounts are equal, and your classmates account has accumulated to Z . Determine Z.
(A) 1800 (B) 1854 (C) 1900 (D) 1953 (E) 2000
Q2/ You deposit 100 into a savings account at time 0, which pays interest at a nominal rate of i, compounded semiannually. Your friend deposits 200 into a different savings account at time 0, which pays simple interest at an annual rate of i.
You and your friend earn the same amount of interest during the last 6 months of the 10th year. Calculate i.
(A) 8% (B) 7.4% (C) 6.8% (D) 6% (E) 5.2%
Q3/ Money is deposited in a bank. For the first 4 years interest accumulates at annual nominal rate of 6% convertible monthly. For the next 6 years it accumulates at a force of interest of 5%. For the 10 year period what is the equivalent nominal discount rate convertible quarterly?
(A) 4.9% (B) 5.2% (C) 5.4% (D) 5.7% (E) 5.9%
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