Exam1 Review

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
Find the interest. Round to the nearest cent.
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1) $1980 at 6% for 5 years 1)
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A) Interest = $22.28 B) Interest = $63.36
C) Interest = $633.60 D) Interest = $1760.00

Find the exact interest. Use 365 days in a year, and use the exact number of days in a month. Round to the nearest cent, if
necessary.
2) $3300 at 8% for 160 days 2)
A) $115.73 B) $117.33 C) $11.73 D) $11.57

3) A loan of $98,000 at 5.3% made on Feb 4 and due on June 30 3)

A) $2106.46 B) $2120.29 C) $2149.74 D) $2077.60

For the given bond, whose interest rate is provided, find the semiannual interest payment and the total interest earned
over the life of the bond.
4) $10,000 FI National Corporation 18-year bond at 4.5% 4)
A) $450.00; $8100.00 B) $22,500.00; $810,000.00
C) $225.00; $8100.00 D) $20.00; $7200.00

Find the future value of the loan.

5) $34,300 loan at 3.5% for 4 months. 5)
A) $347,001.67 B) $34,700.17 C) $39,102.00 D) $74,316.67

Find the present value of the future amount. Assume 365 days in a year. Round to the nearest cent.
6) $19,000 for 2 months; money earns 5% 6)
A) $18,842.98 B) $18,921.16 C) $157.02 D) $18,095.24

The given Treasury bill was sold in April of this year. Find (i) the price of the T-bill, and (ii) the actual interest rate paid
by the Treasury. Round dollar amounts to the nearest cent and interest rates to the nearest thousandth.
7) Three-month $5000 T-bill with discount rate 0.120% 7)
A) (i) $4998.50; B) (i) $4998.20;
(ii) About 0.12% (ii) About 0.144%
C) (i) $4999.85; D) (i) $5001.50;
(ii) About 0.012% (ii) About 0.12%

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Find the compound amount for the deposit. Round to the nearest cent.
8) $1000 at 8% compounded annually for 8 years 8)
A) $1560.00 B) $1850.93 C) $1640.00 D) $1713.82

9) $5521 at 8% compounded daily for 4 years 9)

A) $7602.86 B) $2392.08 C) $7603.12 D) $1497.41

Find the compound interest earned by the deposit. Round to the nearest cent.
10) $1000 at 3% compounded semiannually for 10 years 10)
A) $300.00 B) $160.54 C) $343.92 D) $346.86

Find the interest rate (with annual compounding) that makes the statement true. Round to the nearest tenth when
necessary.
11) $853 grows to $1869.03 in 20 years 11)
A) 4.5% B) 4.95% C) 4% D) 2.5%

Find the compound amount and the interest earned when the given investment has continuous compounding.
12) $100,000 at 4.4% for 16 years 12)
A) $202,182.38; $102,182.38 B) $107,040.00; $7040.00
C) $10,449.82; $4498.24 D) $211,277.02; $111,277.02

Solve the problem.

13) Find the face value (to the nearest thousand dollars) of the 10-year zero-coupon bond at 3.6% 13)
(compounded semiannually) with a price of $17,498.
A) $25,500 B) $15,800 C) $25,000 D) $15,000

Find the APY corresponding to the given nominal rates.

14) 5% compounded semiannually 14)
A) 5.09% B) 5.12% C) 5.00% D) 5.06%

Find the amount that should be invested now to accumulate the following amount, if the money is compounded as
indicated.
15) $3500 at 5% compounded quarterly for 5 yr 15)
A) $2730.03 B) $2742.34 C) $4487.13 D) $769.97

Solve the problem. Round to the nearest cent.

16) If inflation is 1% a year compounded annually, what will it cost in 15 years to buy a house 16)
currently valued at $121,000?
A) $139,086.38 B) $130,399.61 C) $141,882.02 D) $140,477.24

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Solve the problem.
17) A bank gives you two options to choose from for your investments: 17)
Option A: 6% annual interest rate compounded yearly; and
Option B: 5.9% annual interest rate compounded quarterly.
Decide which is the better investment at the end of 2 years.
A) Option B B) Option A

Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated.
18) R = $7500, i = 7% interest compounded semiannually for 4 years 18)
A) $58,345.56 B) $131,254.61 C) $67,887.65 D) $282,173.37

Find the final amount (rounded to the nearest dollar) in this retirement account, in which the rate of return on the account
and the regular contribution change over time.
19) $300 per month invested at 6%, compounded monthly, for 15 years; then $700 per month invested 19)
at 7%, compounded monthly, for 15 years.
A) About $474,476 B) About $309,119
C) About $761,369 D) About $470,432

Find the amount of each payment to be made into a sinking fund so that enough will be present to accumulate the
following amount. Payments are made at the end of each period. The interest rate given is per period.
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20) $92,000; money earns 7% compounded quarterly for 3 years 20)
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A) $2824.65 B) $6363.90 C) $1262.83 D) $2965.12

Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is
the same as the payment period.
21) $60,000 to be accumulated in 10 years; annual payments of $3940. Round to the nearest 21)
hundredth.
A) 9.64% B) 9.11% C) 9.83% D) 9.05%

Find the future value of the annuity due.

22) $200 deposited at the beginning of each quarter for 12 years at 7% compounded quarterly 22)
A) $14,652.56 B) $3828.13 C) $15,112.48 D) $14,200.55

Find the payment that should be used for the annuity due whose future value is given. Assume that the compounding
period is the same as the payment period.
23) $8000; quarterly payments for 8 years; interest rate 4.1%. 23)
A) $31.45 B) $120.37 C) $69.42 D) $210.35

Solve the problem.

24) Lou has an account with $10,000 which pays 9% interest compounded annually. If to that account, 24)
Lou deposits $5000 at the end of each year for 4 years, find out the amount in the account after the
last deposit.
A) $32,865.65 B) $22,865.65 C) $36,981.46 D) $36,465.65

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Find the present value of the ordinary annuity.
25) Payments of $60,000 made semiannually for 12 years at 4.2% compounded semiannually 25)
A) $1,011,798.00 B) $1,122,084.24 C) $1,112,424.00 D) $1,127,004.00

Find the amount necessary to fund the given withdrawals.

26) Semiannual withdrawals of $220 for 7 years; interest rate is 7.4% compounded semiannually. 26)
A) $4774.15 B) $1335.22 C) $9521.29 D) $2370.60

Find the payment made by the ordinary annuity with the given present value.
27) $50,000 monthly payments for 45 years; interest rate is 4.6% compounded monthly. 27)
A) $2,063,010.45 B) $14,695,906.14 C) $11,391,050.38 D) $3,792,673.35

Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end of each
year for 20 years at the given interest rate, compounded annually).
28) $85,000 at 5% 28)
A) $1,058,947.00 B) $1,027,250.50 C) $1,059,287.88 D) $1,089,802.00

Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a
year.
29) $30,000 bond with coupon rate 4.5% that matures in 5 years; current interest rate is 6.4%. 29)
A) $27,593.52 B) $21,893.96 C) $22,568.96 D) $28,268.52

Find the payment necessary to amortize the loan.

30) $9000; 6% compounded annually; 7 annual payments 30)
A) $1449.32 B) $1627.96 C) $1612.21 D) $1830.27

Find the monthly house payment necessary to amortize the following loan.
31) In order to purchase a home, a family borrows $121,000 at 3.0% for 30 yr. What is their monthly 31)
payment? Round the answer to the nearest cent.
A) $302.51 B) $1012.99 C) $510.14 D) $4191.51

Find the monthly payment and estimate the remaining balance (to the nearest dollar). Assume interest is on the unpaid
balance.
32) 30-year car loan for $235,000 at 3.21%; remaining balance after 20 years. 32)
A) $8162.32; $580,759 B) $1998.34; $656,476
C) $1017.58; $180,049 D) $1017.58; $104,332

Insert "⊆" or "⊈" in the blank to make the statement true.

33) {2, 4, 6} {1, 2, 3, 4, 6} 33)
A) ⊈ B) ⊆

Find the number of subsets of the set.

34) {math, English, history, science, art} 34)
A) 24 B) 32 C) 28 D) 16

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Find the complement of the set.
35) {x∣x is a whole number less than 7} if U is the set of all whole numbers 35)
A) {x∣x is a whole number < 7} B) {x∣x is a whole number ≤ 7}
C) {x∣x is a whole number > 7} D) {x∣x is a whole number ≥ 7}

The lists below show five agricultural crops in Alabama, Arkansas, and Louisiana.

Alabama Arkansas Louisiana

soybeans (s) soybeans (s) soybeans (s)
peanuts (p) rice (r) sugarcane (n)
corn (c) cotton (t) rice (r)
hay (h) hay (h) corn (c)
wheat (w) wheat (w) cotton (t)

Let U be the smallest possible universal set that includes all of the crops listed; and let A, K, and L be the sets of five
crops in Alabama, Arkansas, and Louisiana, respectively. Find the indicated set.
36) A' ∪ L 36)
A) {c, n, r, s, t} B) {h, p, w} C) {h, n, p, r, t, w} D) {n, r, t}

Use a Venn diagram to answer the question.

37) At East Zone University (EZU) there are 724 students taking College Algebra or Calculus. 432 are 37)
taking College Algebra, 319 are taking Calculus, and 27 are taking both College Algebra and
Calculus. How many are taking Algebra but not Calculus?
A) 292 B) 405 C) 697 D) 378

38) A local television station sends out questionnaires to determine if viewers would rather see a 38)
documentary, an interview show, or reruns of a game show. There were 400 responses with the
following results:
120 were interested in an interview show and a documentary, but not reruns;
16 were interested in an interview show and reruns, but not a documentary;
56 were interested in reruns but not an interview show;
96 were interested in an interview show but not a documentary;
40 were interested in a documentary and reruns;
24 were interested in an interview show and reruns;
32 were interested in none of the three.
How many are interested in exactly one kind of show?
A) 202 B) 172 C) 192 D) 182

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Solve the problem.
39) The contingency table lists the cross tabulation of whether adults feel their life is exciting, routine, 39)
or dull for males and females among the adults chosen.

Life Classification Males (M) Females (F)

Exciting (E) 263 283
Routine (R) 181 247
Dull (D) 30 37

Using the letters in the given table, find the number of respondents in the following set.
R∩M
A) 247 B) 181 C) 474 D) 428

Write the sample space for the given experiment.

40) A box contains 10 red cards numbered 1 through 10. One card is drawn at random. 40)
A) {100} B) {10}
C) {1, 10} D) {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}

41) A group of 15 people are assigned numbers 1 through 15. A person assigned a number of 5 or less 41)
is chosen.
A) {1, 2, 3, 4, 5} B) {1, 2, 3, 4} C) {1} D) {15}

Find the probability of the given event.

42) A card drawn from a well-shuffled deck of 52 cards is a face card or a 6. 42)
2 4 12
A) B) 16 C) D)
13 13 13

43) A bag contains 19 balls numbered 1 through 19. A randomly chosen ball has an even number. 43)
2 19 9
A) B) C) D) 9
19 9 19

Use the given table to find the probability of the indicated event. Round your answer to the nearest thousandth.
44) College students were given three choices of pizza toppings and asked to choose one favorite. The 44)
following table shows the results.

toppings freshman sophomore junior senior

cheese 13 10 24 25
meat 29 25 10 13
veggie 10 13 29 25

A randomly selected student prefers a cheese topping.

A) .319 B) .111 C) .347 D) .341

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An experiment is conducted for which the sample space is S = {a, b, c, d}. Decide if the given probability assignment is
possible for this experiment.
45) 45)
Outcomes Probabilities
a .51
b .23
c .10
d .16
A) No B) Yes

Solve the problem.

46) One card is selected from a deck of cards. Find the probability of selecting a black card or a card 46)
less than 9. (Note: The ace is considered a low card.)
10 45 11 21
A) B) C) D)
13 52 13 26

Suppose P(C) = .048, P(M ∩ C) = .044, and P(M ∪ C) = .524. Find the indicated probability.
47) P(M) 47)
A) .528 B) .520 C) .480 D) .472

Find the odds in favor of the indicated event.

48) Rolling an odd number with a fair die. 48)
A) 1 to 2 B) 3 to 2 C) 1 to 1 D) 2 to 1

Convert the odds that the given event will occur to the probability that the event will occur.
49) The odds in favor of winning a particular lottery are 1 to 2,100,000. 49)
2,100,000 1 1 1
A) B) C) D)
2,100,001 2,100,000 2,099,999 2,100,001

Solve the problem.

50) A survey revealed that 50% of people are entertained by reading books, 33% are entertained by 50)
watching TV, and 17% are entertained by both books and TV. What is the probability that a
person will be entertained by either books or TV? Express the answer as a percentage.
A) 100% B) 17% C) 66% D) 83%

Solve the problem, rounding the answer as appropriate. Assume that "pure dominant" describes one who has two
dominant genes for a given trait; "pure recessive" describes one who has two recessive genes for a given trait; and
"hybrid" describes one who has one of each.
51) In a population, 50% of females are pure dominant, 40% are hybrid, and 10% are pure recessive. If 51)
a pure recessive male mates with a random female and their first offspring has the dominant trait,
what is the probability that the female is pure dominant?
A) .34 B) .50 C) .75 D) .56

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Prepare a probability distribution for the experiment. Let x represent the random variable, and let P represent the
probability.
52) Three coins are tossed, and the number of tails is noted. 52)
A) B) C) D)
x P x P x P x P
0 1/3 0 1/6 0 3/16 0 1/8
1 1/6 1 1/3 1 5/16 1 3/8
2 1/6 2 1/3 2 5/16 2 3/8
3 1/3 3 1/6 3 3/16 3 1/8

Give the probability distribution and sketch the histogram.

53) A class of 44 students took a 10-point quiz. The frequency of scores is given in the table. 53)
Number of
Points Frequency
5 2
6 5
7 10
8 15
9 9
10 3
Total: 44

A) Number 5 6 7 8 9 10
Probability .07 .20 .34 .23 .11 .05

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B) Number 5 6 7 8 9 10
Probability .04 .11 .22 .34 .20 .06

C) Number 5 6 7 8 9 10
Probability .06 .20 .34 .22 .11 .04

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 D) Number 5 6 7 8 9 10
Probability .05 .11 .23 .34 .20 .07

Find the expected value of the random variable in the experiment.

54) Three coins are tossed, and the number of tails is noted. 54)
A) 1 B) 2 C) 1.75 D) 1.5

55) Five rats are inoculated against a disease. The number contracting the disease is noted and the 55)
experiment is repeated 20 times. Find the probability distribution and give the expected number
of rats contracting the disease.

A) 2.3 B) 1 C) .9 D) 2.4

Find the expected value for the random variable x having this probability function.
56) 56)
p

a = 18 b = 19
c = 20 d = 21
A) 20 B) 15.6 C) 15.9 D) 19.5

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Answer Key
Testname: TEST 1 REVIEW 1324

1) C
2) A
3) D
4) C
5) B
6) A
7) A
8) B
9) A
10) D
11) C
12) A
13) C
14) D
15) A
16) D
17) A
18) C
19) D
20) B
21) D
22) C
23) D
24) C
25) B
26) D
27) C
28) C
29) A
30) C
31) C
32) D
33) B
34) B
35) D
36) A
37) B
38) C
39) B
40) D
41) A
42) C
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Answer Key
Testname: TEST 1 REVIEW 1324

43) C
44) A
45) B
46) D
47) B
48) C
49) D
50) C
51) D
52) D
53) D
54) D
55) A
56) A

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