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FINANCIAL ECONOMICS FINAL EXAM – 2015 _________ TYPE A EXAM

NAME ..........................................................................................................
GROUP ........................................................................................................
DEGREE.....................................................................................................

15.Mr. Francisco Martínez has a mortgage loan to finance the acquisition of his house, and
the interest rate applied is EURIBOR +0.5%, which is being reviewed annually taking as
reference the latest EURIBOR. During the last twelve months the EURIBOR was 5% but,
just now when you have to review your mortgage, the EURIBOR has dropped to 3%. The
outstanding capital on the loan is €200,000, and there are 25 years left until maturity, paid
with periodic monthly payments of the same amount. Determine the reduction in the quota
that you will have thanks to the fact that the EURIBOR applied will be the
3% instead of 5%. c
to. Between €100 and €125
b. More than €300
c. Between €215 and €220
d. None of the above.

16. If a person decides to invest 1100 euros in an instrument that gives a return
annual rate of 12%, how many periods should you maintain the investment to obtain a
50% total profit? c
to. Between 3.1 and 3.2
b. Between 3.3 and 3.4
c. Between 3.5 and 3.6
d. None of the above

12. Sell a stock short or carry out “short selling” d

to. It implies that the investor sells a share that he does not own and therefore must
repurchase at the price at which it is quoted when the position is closed
b. Allows the investor to benefit from a drop in the share price
c. Allows the investor to benefit from a rise in the share price
d. a and b are correct

16. Fernando has decided to buy a car whose price is 25,000 euros,
financing it for 10 years. If the payments are monthly (and constant) and the type of
Interest is 5% per year, how much would you have left to pay after 5 years have passed?
a) Less than 12350 Euros. w
b) Between 12,400 and 12,550 Euros.
c) Between 14,000 and 14,100 Euros.
d) Between 15800 and 15900 Euros.

1. A man plans to retire in 10 years, and wants to have 500,000 Euros to

his retirement. How much should you contribute at the end of each month into a savings
account, that capitalizes at 2% annual interest, to reach that figure? Within a month
will make the first contribution. d
a) Between 1800 and 2400 Euros.
b) Between 2400 and 2800 Euros.
c) Between 2800 and 3200 Euros.
d) Between 3200 and 3800 Euros.

2. Assume that César holds a 10 year mortgage (with quarterly payments), and an
initial debt of 400,000 € with BBVA. This bank charges an annual interest rate equal to
the EURIBOR plus a differential of 1.00%. If the EURIBOR is 3.5%, determine the
constant amount that should be paid by César.
a. Between 12,420 and 12,439 euros
b. Between 12,100 and 12,355 euros
c. Between 10,700 and 10,800 euros.
d. None of the previous answers is correct.

3.Roberto has a 10-year mortgage (with periodic quarterly payments) with a

initial debt of €300,000 in Santander bank. This bank charges a rate of annual interest equal
to EURIBOR plus a differential of 1%. If the Euribor is in the current at 2.5%, determine the
constant fee that Roberto should pay. to
to. Between 8000 and 9000 euros
b. Between 9000 and 10000 euros
c. Between 10,000 and 11,000 euros.
d. None of the above

4.7. Determine the value within 6 years and six months of an amount equal to €10,000
paid today (t0). Assume that compound capitalization governs, the interest rate
compound is 5% annually. b
a. 46181,77 euros
b. 13.731,89 euros
c. 44187,51 euros
d. None of the above.

1) A large company plans to offer a supplementary pension plan to its employees whereby
each employee will receive 2,000 Euros per year in their pension plan until the retirement
age of 65 years of age. What should be the minimum age to start benefiting from this plan if
the company wants to limit the total cost of the plan per employee to a maximum of 14,000
euros in present value terms (annual cost of capital = 12%)?
a) From approximately 49 years of age.
b) From approximately 42 years of age.
c) From approximately 38 years of age.
d) None of the above.

3. In Spain there are around 581,000 civil servants in the Central Administration. For next
year, the average annual wage of a civil servant is initially expected to be 20,000 euros.
The average annual growth rate of wages in the last 15 years has been equal to 2.5%. Now
suppose that the Spanish Government announces a cut of 10% in the wages of civil
servants for next year. The average annual growth rate of wages is expected to remain
equal to 2.5% in the long run and the interest rate is equal to 3.5%. Compute the amount
of money that the Spanish Government saves in the long run with this measure?
a)116,200 million euros
b. 98,300 million euros
c. 102,400 million euros
d. 107,500 million euros

9.- Julia is planning her retirement – ​she has 20 years left. When it occurs, you want to have
with a capital of 300,000 euros. If the annual interest rate is 0.50%, what should be the
monthly amount that you must contribute, knowing that you will begin to make contributions
to the end of this month? c
a. 1945.25€
b. 228.37€
c. 1188.94€
d. None of the above.

10. If you contract a bank deposit for N periods with an initial investment C and a
simple compounding interest rate i, the total amount of interest you will receive will be:
a) C (1 + iN)
b) C (1 + i)N
c) CiN
d) None of the above

2. Your online travel agency proposes today three alternative plans to finance your
summer holidays in the Far East. Which one seems more advantageous if your
bank offers an interest rate of 2.5% per year?
• Plan "Discount for cash payment": Single cash payment of €3,450.
• Plan "Financing at no extra cost": 12 monthly payments of €290 each with the
first payment beginning in exactly one month.
• Plan "Enjoy now and pay later": 4 quarterly payments of €950 each, with the
first payment due 15 months from today.

a) Plan "Discount for cash payment."

b) Plan "Financing at no extra cost."
c) Plan "Enjoy now and pay later."
d) One would be indifferent between plans "Discount for cash payment" and
"Financing at no extra cost."

11.Ms. Gómez has signed a mortgage contract to buy a house that costs 250,000€. The
mortgage will require monthly payments for the next 10 years and the interest rate
has been set at Euribor plus a 2% premium. If the current Euribor rate is 0.5%, which is
the total amount of each monthly payment? d
a. Between 2,500€ and 2,600€
b. More than 5,000€
c. Between 2,901€ and 3,499€
d. Between 2,300€ and 2,400€

12. On 13 November 2018 the price of Endesa shares at the Madrid Stock Exchange
was 7.3€ and simultaneously at the London Stock Exchange, where the stock is also
listed, the price was 6.3GBP, with an exchange rate of 0.8GBP/€. Was there an
arbitrage opportunity? c

a. Yes, but only if the total commissions to be paid at both exchanges were
less than 0.2€.
b. There was no arbitrage opportunity.
c. Yes, selling short in London Stock Exchange and buying in Madrid
Stock Exchange (suppose that total commissions are less than 0.3€).
d. Yes, selling short in Madrid Stock Exchange and buying in London
Stock Exchange (suppose that total commissions are less than 0.3€).

14. Determine the NPV of a technology project that has an initial investment of
1000€, knowing that at the end of year 0 (just as year 1 begins), it will pay 150€,
and afterwards this payment will increase annually by 15% until year 15 where
the project ends (in total, 15 payments). The discount rate for this type of project
is 22%, and at the beginning of the project we had to undertake a study to
determine the project’s viability and estimate the cast flows, and this cost us
230€.
a. NPV between 20€ and 42€
b. NPV between 60€ and 100€
c. NPV between 220€ and 245€
d. NPV between 253€ and 265€
FinalMay2019-Incomplete.pdf (wuolah.com)
FinalJunio2015.pdf (wuolah.com)

To purchase a home, Juan considers applying for a 25-year mortgage today for the
amount of €250,000 at 9% annual interest and which will be paid in installments
monthly. The first monthly payment will take place in just 1 month. Within 8 years from
today Juan will receive an inheritance from his grandmother in the amount of €172,000
with which you will pay off this mortgage. What capital will you have left pending?
pay in year 8 if you use the 172,000 euros to reduce your mortgage with the bank?
Suppose it is a mortgage with constant monthly payments.

a)Between 20,000 and 30,000 euros

b)Between 42,000 and 49,000 euros

c)Between 50,000 and 55,000 euros

d)Between 15,000 and 19,000 euros

15. Carlos wants to buy a villa for 600,000 Euros, for which he must request a mortgage of
450,000 Euros to Banco Santander. If you sign a 30-year contract at 8% annual interest, what
will be the monthly fee to pay? Amortization is assumed with constant annuities. d

a.Between 1,500 and 2,000 Euros.

b.Between 2,000 and 2,500 Euros.
c. Between 2,500 and 3,000 Euros.
d.More than 3,000 Euros