NTU Financial Management AB1201 2016/2017 Sem 2 Mid-term quiz

A bunch of NBS students just had the FM quiz tonight, 7pm to 8pm. I would say the quiz is rather tricky especially in theory questions. The following answer is what I presumed to be correct, but I would like to emphasise NO GUARANTEE 100% correct.




1) E
2) B
3) A
4) D
5) D
6) C
7) C
8) B
9) B
10)B
11)C
12)D
13)C
14)D
15)E

Explanation to some tricky questions:

Qn1) caught many people by surprise. the answer's in the lecture 1 slides! word for word.

Qn11)
Throughout the entire repayment of the loan, John made payments of $1,000 every year for 10 years.
Therefore total payments = $10,000
Remember that Total Principle (loan amount) = Total Payments - Total Interest,
plug in values, you get Loan amount = 10,000 - Total Interest
In the question, it is stated that loan amount = X. Also, Total interest = X
Hence, plug in values, you get X = 10,000 - X, solve for X to get X = 5,000

After this is the easier part. Use the formula

to find I, which is 15.0984%. Alternatively, use financial calculator, these are the values:

N=10, PV=5000 (loan amount), PMT=-1000, FV=0, CPT I/Y to get 15.0984%.

After that, interest repaid during first year of loan is beginning balance x interest rate.

5000 (balance) x 15.0984% = 754.9207 ≈ 755 (final ans)

Disclaimer: If actual answers turned out to be otherwise, please do not blame us!

Difficulty level of quiz: Average. Just have to be careful and read your textbook unless you have finance background.