Multiple choice

1. An investment at 10.47% effective rate compounded monthly is equal to a nominal (annual) rate of:  

a. 10.99% 

b. 9.57% 

c. 10% 

d. None of the above 

2. An investment at 12% nominal rate compounded monthly is equal to an annual rate of:  

a. 12.68% 

b. 12.36% 

c. 12% 

d. None of the above 

3. Mr. William expects to retire in 30 years and would like to accumulate $1 million in the pension fund. If the annual interest rate is 12% per year, how much should Mr. Williams put into the pension fund each month in order to achieve his goal? Assume that Mr. Williams will deposit the same amount each month into his pension fund and also use monthly compounding.  

a. $286.13 

b. $771.60 

c. $345.30 

d. None of the above 

4. An investment at 10% nominal rate compounded continuously is equal to an equivalent 

annual rate of:  

a. 10.250% 

b. 10.517% 

c. 10.381% 

d. None of the above