Question 1

The primary function of financial markets is to:

		ensure that interest and dividend payments are made to stockholders and bondholders.
		facilitate the payment for goods and services between producers and consumers.
		facilitate the movement of cash from savers to companies that need money.
		all of the above.

5 points

Question 2

Fidelity Mutual (an insurance company) has offered you a single premium annuity that will pay you $12,000 at the end of each year for the next 15 years. If you must pay $109,296 today for this annuity, what is your expected rate of return?

		8%
		9%
		7%
		10%

5 points

Question 3

Your uncle promises to give you $550 per quarter for the next five years starting today. How much is his promise worth right now if the interest rate is 8% compounded quarterly?

		$9,173.14
		$13,363.57
		$13,630.84
		$8,993.27

5 points

Question 4

The present value of a future amount is

		that sum which if deposited today will grow into the future amount.
		referred to as the discounted value of the future amount.
		always smaller than the future amount, for positive interest rates.
		all of the above

5 points

Question 5

A sale of stock between two investors is a ____ market transaction.

		primary
		secondary
		money
		independent