Question

5) When a consumer gets a loan from a bank, the benchmark interest rate charged to them is called the ___________________________ rate.

6) Mohammed and Vanessa are both taking out student loans to complete their Ph. D in Business. They both go to TD Bank to apply for a loan. Mohammed has a credit rating of 800, while Vanessa has a credit rating of 650. Who would get the lower interest rate? _________________ Why? _____________________________________________________________________________________

7) Madalena borrows $300,000 from TD Bank at an annual interest rate of 8%. What is the amount of interest she will pay per year??

8) Jose has a 25,000 loan with a 5% annual interest rate, with a payment due April 1 st. What is the interest amount due on the loan?

12) Angela buys 500 shares of McDonalds stock on 5/1/2000 at $120 and sells it on 12/31/2005 at $150 per share.

What is Angela’s return on investment? _________________________

What is Angela’s Capital Gain? _________________________________

13) Rita buys 100 shares of Apple stock at $200 and sells it one year later at $218 per share. Apple also paid a dividend of $2.00 per share to all shareholders that year.

What is Rita’s capital gain?

What is the dividend yield on the stock?

What is the total amount that Rita received from Apple in dividends?

What is Rita’s TOTAL return on investment?

PLEASE REPLY ALL QUESTIONS IF YOU DONT KNOW HOW TO DO IT> PLEASE DONT POST IT!

Answer 1

5) Base Rate

6) Mohammad will get the loan at a lower Interest rate as The score detemines how well you have repaid you previous loans back depending upon the credit history. So higher the Credit score , better is for the investor as he/she will get the loan at lower interest rate. As from the bank side , the risk is lower to lend this person money as his credit score is higher means his credit history has been good.

7) She will have to pay .08*300 =   24$ / year as Interest.      I = P*R*T /100

8) Same as previous : .05*25000 = $1250 / year

12)   Return on investment ; ( Final amount of investment -Intial / initial )    == ( 150-120   )/120     =25%

Capital Gains ( Profit) :   Final amount - inital Investment

    (150-120) *500 = $15000

13) Intial Stock price ( Cost price): $200

Selling Price : $ 218

no. of stocks : 100 shares

Dividend : $ 2 / Share

13.a )    Capital gain    (218-200)*100   =   $1800

b.) Dividend yield : Dividend / Price of the stock      2/218   = .91%         ( Based on the Current stock price)

c.) Total amount Recieved : $2 / share * 100 shares   = $ 200

d.) Total Return : (218-200 + 2) /200     =10%

    (P2-P1 +Div) /P1

You can add the Dividend yield and capiat appreciation to get the same answer.

Hope it helps:)