Chapter 14 Quiz

Two years ago Lenny put some money into an account. He earned 6 percent interest on this account and now he has about $1,000. About how much did Lenny deposit into his account two years ago?

about $890

Kayla faces risks and she pays a fee to ABC Company; in return, ABC Company agrees to accept some or all of Kayla's risks. ABC Company is

an insurance company

Rory receives, from an insurance company, a payment of $5,000 each year, and he will continue to receive these payments until he dies. This series of payments is called a(n)

annuity

If the interest rate is 4 percent, then you would be equally happy if you received a gift of either $100 today or a gift of

$112.49 three years from today

Imagine that two years ago you inherited $20,000 and put it into an account paying a fixed 8 percent annual interest rate. How much money do you have in your account now?

$23,328.00

What is the future value of $800 one year from today if the interest rate is 7 percent?

$856.00

Fundamental analysis determines the value of a stock based on

- dividends - the expected final sale price - the ability of the corporation to earn profits

Which distance along the vertical axis represents the marginal utility of an increase in wealth from $600 to $800?

the distance between point B and point C

An asset market is said to experience a speculative bubble when

the price of the asset rises above what appears to be its fundamental value

Sage decides to cash in all his savings to open a recording studio. He has three accounts to cash in. The first earned 9 percent for two years. The second earned 6 percent for three years. And the last earned 3 percent for six years. Supposing he started with $5,000 in each account, from which account will he get the most cash?

the six-year account at 3%