ACTUARY Finance and Economics

Question 1

You invest $1,000 at an annual interest rate of 5% compounded annually. What will the investment be worth after 3 years?

Accepted Answer

$1,157.63

Answer

$1,150

Answer

$1,200

Answer

$1,215.50

Question 2

What is the present value of $2,000 to be received 5 years from now if the annual discount rate is 6%?

Accepted Answer

$1,586.87

Answer

$1,400.95

Answer

$1,490.25

Answer

$1,681.13

Question 3

A bond with a face value of $1,000 pays annual coupons of $50 and has 4 years to maturity. If the market interest rate is 6%, what is the bond price?

Accepted Answer

$980.20

Answer

$950.00

Answer

$1,000.00

Answer

$1,038.45

Question 4

An investor has two assets in a portfolio:

Asset A: Expected return = 8%, weight = 60%
Asset B: Expected return = 12%, weight = 40%
What is the portfolio’s expected return?

Accepted Answer

10.4%

Answer

9.6%

Answer

10.0%

Answer

11.2%

Question 5

If the demand for a good increases and the supply remains unchanged, what happens to the equilibrium price and quantity?

Accepted Answer

Price increases, quantity increases

Answer

Price decreases, quantity decreases

Answer

Price increases, quantity decreases

Answer

Price remains unchanged, quantity increases