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Notes & discounting · Chapter 17
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Notes & discounting · Mock exam

Understand promissory notes, bank discounts, proceeds, and effective rates. 120 multiple-choice questions: 40 concepts and 80 calculations, with complete worked explanations.
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  • Slater, Ch. 17, pp. 450
  • Slater, Ch. 17, pp. 450-451
  • Slater, Ch. 17, pp. 451-452
  • Slater, Ch. 17, pp. 451
  • Slater, Ch. 17, pp. 451-453
  • Slater, Ch. 17, pp. 456
  • Slater, Ch. 17, pp. 457
  • Slater, Ch. 17, pp. 456-457
  • Slater, Ch. 17, pp. 454-455
  • Slater, Ch. 17, pp. 455
  • Slater, Ch. 17, pp. 454
  • Slater, Ch. 17, pp. 452-453
  • Slater, Ch. 17, pp. 453
  • Slater, Ch. 17, pp. 458
  • Slater, Ch. 17, pp. 458-459
  • Slater, Ch. 17, pp. 458-460
  • Slater, Ch. 17, pp. 460
  • Slater, Ch. 17, pp. 451, 456
  • Slater, Ch. 17, pp. 451-457
Notes & discounting · Chapter 17

Exam overview

Answers save as you go.

40concepts
80calculations
Calculation conventions

Use actual days/360 for notes and weeks/52 for the labeled Treasury-bill questions. Keep intermediate maturity values and discounts unrounded. Round final money to cents and annual rates to 0.01 percentage point. Effective rates on proceeds use simple annualization. No fees are included.

Questions in this exam

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01Who is the maker of a promissory note?

Concept

  1. Every person who witnesses the note
  2. The borrower who signs the promise to pay
  3. The calendar service determining maturity
  4. The company receiving payment only
Slater, Ch. 17, pp. 450
02Who is the payee of a promissory note?

Concept

  1. Only the bank that later discounts it
  2. The borrower in every transaction
  3. The party to whom payment is promised
  4. The person counting the days
Slater, Ch. 17, pp. 450
03What does the term of a note describe?

Concept

  1. The length of time until it is due
  2. The borrower's annual income
  3. The discount rate only
  4. The interest dollars only
Slater, Ch. 17, pp. 450
04What is the maturity date?

Concept

  1. The date the note is due
  2. The date the payee first needs cash
  3. Always the discount date
  4. Always the issue date
Slater, Ch. 17, pp. 450
05For a simple interest-bearing note, what is its maturity value?

Concept

  1. Face value less bank discount
  2. Interest alone
  3. Always the proceeds less principal
  4. Face value plus interest
Slater, Ch. 17, pp. 450-451
06For a simple discount note, when is the bank discount withheld?

Concept

  1. Only after the borrower repays face value
  2. At the end of each compounding period
  3. Only after maturity
  4. At the start, before proceeds are paid
Slater, Ch. 17, pp. 451-452
07Which formula calculates bank discount?

Concept

  1. B = M + DT
  2. B = M / (DT)
  3. B = MDT
  4. B = D / (MT)
Slater, Ch. 17, pp. 451
08What are proceeds of a simple discount note?

Concept

  1. Only the interest charge
  2. Cash received after bank discount is deducted
  3. The amount due plus bank discount
  4. The annual stated rate
Slater, Ch. 17, pp. 451-452
09For a simple discount note issued at a positive discount, which is largest?

Concept

  1. Maturity value
  2. All are equal
  3. Proceeds minus bank discount
  4. Proceeds
Slater, Ch. 17, pp. 451-452
10What is repaid at maturity on a simple discount note?

Concept

  1. Its face value
  2. Its proceeds only
  3. Only the bank discount
  4. Face value plus the same discount again
Slater, Ch. 17, pp. 451-452
11Why can a simple discount note cost interest even if called non-interest-bearing?

Concept

  1. The maker never receives money
  2. The payee adds a second face value
  3. Its interest charge can be deducted in advance
  4. Every such note compounds interest monthly
Slater, Ch. 17, pp. 451
12Which denominator is used for the chapter's annualized effective rate on a discount note?

Concept

  1. Proceeds plus time
  2. Face value minus time
  3. Proceeds multiplied by time in years
  4. Face value multiplied by time in years
Slater, Ch. 17, pp. 451-453
13For a positive discount with positive proceeds, how does the effective rate compare with the stated discount rate?

Concept

  1. It is lower
  2. It is always zero
  3. It is always equal
  4. It is higher
Slater, Ch. 17, pp. 451-452
14For equal face values, rates, and terms, how do a simple-interest note's interest and a discount note's bank discount compare?

Concept

  1. The discount is always zero
  2. They cannot be compared
  3. They are equal dollar charges
  4. The interest is always twice the discount
Slater, Ch. 17, pp. 451-452
15For equal face values, rates, and terms, which note initially provides more usable cash?

Concept

  1. Neither provides proceeds
  2. The simple-interest note
  3. They always provide equal cash
  4. The simple discount note
Slater, Ch. 17, pp. 451-452
16Which formula gives proceeds directly from maturity value?

Concept

  1. Pr = M / (1 - DT)
  2. Pr = M(1 + DT)
  3. Pr = MDT
  4. Pr = M(1 - DT)
Slater, Ch. 17, pp. 456
17Which formula finds the face value needed for desired proceeds?

Concept

  1. M = Pr / (1 - DT)
  2. M = Pr / (1 + DT)
  3. M = Pr - DT
  4. M = Pr(1 - DT)
Slater, Ch. 17, pp. 457
18What must be true of 1 - DT for a standard discount note to provide positive proceeds?

Concept

  1. It must equal zero
  2. It must equal the number of days
  3. It must be negative
  4. It must be positive
Slater, Ch. 17, pp. 456-457
19Which formula finds the bank discount rate from B, M, and T?

Concept

  1. D = M / (BT)
  2. D = BMT
  3. D = B / (MT)
  4. D = B / (M + T)
Slater, Ch. 17, pp. 456
20Which formula finds the discount note's time in years?

Concept

  1. T = BMD
  2. T = B / (MD)
  3. T = M / (BD)
  4. T = B / (M - D)
Slater, Ch. 17, pp. 457
21Which formula finds simple-interest principal from maturity value?

Concept

  1. P = M(1 + RT)
  2. P = M / (1 + RT)
  3. P = M / (1 - RT)
  4. P = M - R - T
Slater, Ch. 17, pp. 454-455
22Which quantity equals the interest on a simple-interest note when M and P are known?

Concept

  1. M + P
  2. M - P
  3. M / P
  4. P - M
Slater, Ch. 17, pp. 455
23What does a balloon payment mean in the chapter's one-payment note examples?

Concept

  1. The initial cash proceeds
  2. An automatic daily discount
  3. A single payment settling the note at maturity
  4. Equal weekly interest-only installments
Slater, Ch. 17, pp. 454
24In the textbook model, how does a Treasury bill bought at a discount generate a return?

Concept

  1. It must pay monthly coupons
  2. Its face value is returned immediately
  3. It is redeemed for more than its purchase price
  4. Its purchase price always exceeds redemption value
Slater, Ch. 17, pp. 452-453
25For the chapter's 13-week Treasury-bill example, what fraction of a year is used?

Concept

  1. 13/52
  2. 13/365
  3. 52/13
  4. 13/360
Slater, Ch. 17, pp. 453
26For a Treasury bill bought at a discount, which amount is the investor's initial outlay?

Concept

  1. The future maturity date
  2. Only the discount
  3. The face value plus discount
  4. The purchase price, or proceeds
Slater, Ch. 17, pp. 452-453
27What does it mean to discount an existing note?

Concept

  1. Erase the original interest rate
  2. Cancel the maker's repayment duty
  3. Extend it automatically for a year
  4. Sell it before maturity for cash
Slater, Ch. 17, pp. 458
28Which amount is used as the bank's discount base when an interest-bearing note is sold?

Concept

  1. Only the accrued interest to sale date
  2. Only the seller's desired profit
  3. Only the original principal
  4. The original note's maturity value
Slater, Ch. 17, pp. 458-459
29What is the discount period for a note sold before maturity?

Concept

  1. Time from issue to sale
  2. Time from the sale date to maturity
  3. The entire original term in every case
  4. The time after maturity
Slater, Ch. 17, pp. 458-460
30What is the first step in discounting an interest-bearing note?

Concept

  1. Subtract the bank discount from original principal immediately
  2. Count only the seller's holding period
  3. Find the original note's interest and maturity value
  4. Change the maker's rate to the bank's rate
Slater, Ch. 17, pp. 458
31Which rate is used to calculate the original note's maturity value?

Concept

  1. The original simple interest rate
  2. The effective rate of an unrelated Treasury bill
  3. The inflation rate
  4. The bank discount rate only
Slater, Ch. 17, pp. 458-459
32Which rate is used to calculate the bank's charge when buying the note?

Concept

  1. The sum of both rates
  2. The original rate divided by the face value
  3. The bank discount rate
  4. Always the original note's interest rate
Slater, Ch. 17, pp. 458-459
33After a note is discounted, how is the seller's cash receipt calculated?

Concept

  1. Maturity value plus bank discount
  2. Original principal minus original interest
  3. Maturity value minus bank discount
  4. Bank discount minus maturity value
Slater, Ch. 17, pp. 458-459
34What is a contingent liability in the chapter's discounting arrangement?

Concept

  1. A potential duty of the seller to pay if the maker defaults
  2. The amount of cash already received
  3. A guaranteed extra profit for the seller
  4. An immediate cancellation of all debt
Slater, Ch. 17, pp. 458
35If an existing non-interest-bearing note is sold to a bank, what is its maturity value?

Concept

  1. Zero
  2. Its face value
  3. Its proceeds less discount
  4. Its face value plus an unstated original interest charge
Slater, Ch. 17, pp. 460
36With M and D fixed and positive, what happens to proceeds if the discount period gets longer?

Concept

  1. Proceeds become the original interest rate
  2. Proceeds stay unchanged
  3. Proceeds decrease
  4. Proceeds increase
Slater, Ch. 17, pp. 451, 456
37With M and T fixed and positive, what happens to proceeds if the bank discount rate rises?

Concept

  1. The face value becomes zero
  2. Proceeds increase
  3. Proceeds double automatically
  4. Proceeds decrease
Slater, Ch. 17, pp. 451, 456
38Why can a seller's proceeds from an interest-bearing note exceed the original principal?

Concept

  1. Original interest can exceed the bank's discount
  2. The discount period must be longer than the original term
  3. The bank always waives all charges
  4. The face value must double
Slater, Ch. 17, pp. 458-459
39In a positive-rate simple-interest note with no fees, how does the annualized effective rate compare with its stated simple rate?

Concept

  1. They are equal under the same time basis
  2. Effective rate is always higher
  3. Effective rate is always lower
  4. Effective rate is necessarily zero
Slater, Ch. 17, pp. 451-452
40Why must the original term and discount period be kept separate when a note is sold?

Concept

  1. Only the longer one can be used for every calculation
  2. Neither affects the proceeds
  3. They are always the same duration
  4. They apply to different calculations and waiting periods
Slater, Ch. 17, pp. 458-460
41A simple discount note has face value $6,000.00, annual discount rate 6.00%, and term 90 days. Find the bank discount.

Calculation

  1. $90.00
  2. $360.00
  3. $5,910.00
  4. $88.77
Slater, Ch. 17, pp. 451-457
42A simple discount note has face value $12,500.00, annual discount rate 7.50%, and term 120 days. Find the bank discount.

Calculation

  1. $937.50
  2. $312.50
  3. $308.22
  4. $12,187.50
Slater, Ch. 17, pp. 451-457
43A simple discount note has face value $18,000.00, annual discount rate 8.00%, and term 150 days. Find the bank discount.

Calculation

  1. $591.78
  2. $600.00
  3. $1,440.00
  4. $17,400.00
Slater, Ch. 17, pp. 451-457
44A simple discount note has face value $8,400.00, annual discount rate 9.50%, and term 75 days. Find the bank discount.

Calculation

  1. $798.00
  2. $8,233.75
  3. $166.25
  4. $163.97
Slater, Ch. 17, pp. 451-457
45A simple discount note has face value $25,000.00, annual discount rate 5.40%, and term 200 days. Find the bank discount.

Calculation

  1. $750.00
  2. $1,350.00
  3. $739.73
  4. $24,250.00
Slater, Ch. 17, pp. 451-457
46How much cash is received from a $7,300.00 simple discount note at 6.00% for 90 days?

Calculation

  1. $7,190.50
  2. $7,300.00
  3. $109.50
  4. $7,409.50
Slater, Ch. 17, pp. 451-457
47How much cash is received from a $13,800.00 simple discount note at 7.50% for 120 days?

Calculation

  1. $345.00
  2. $13,800.00
  3. $13,455.00
  4. $14,145.00
Slater, Ch. 17, pp. 451-457
48How much cash is received from a $19,300.00 simple discount note at 8.00% for 150 days?

Calculation

  1. $18,656.67
  2. $19,943.33
  3. $19,300.00
  4. $643.33
Slater, Ch. 17, pp. 451-457
49How much cash is received from a $9,700.00 simple discount note at 9.50% for 75 days?

Calculation

  1. $9,891.98
  2. $191.98
  3. $9,508.02
  4. $9,700.00
Slater, Ch. 17, pp. 451-457
50How much cash is received from a $26,300.00 simple discount note at 5.40% for 200 days?

Calculation

  1. $27,089.00
  2. $789.00
  3. $25,511.00
  4. $26,300.00
Slater, Ch. 17, pp. 451-457
51A $6,000.00 simple discount note is discounted at 6.00% for 90 days. Find its annualized effective rate on proceeds.

Calculation

  1. 5.91%
  2. 6.09%
  3. 1.50%
  4. 6.00%
Slater, Ch. 17, pp. 451-457
52A $12,500.00 simple discount note is discounted at 7.50% for 120 days. Find its annualized effective rate on proceeds.

Calculation

  1. 7.50%
  2. 7.69%
  3. 2.50%
  4. 7.32%
Slater, Ch. 17, pp. 451-457
53A $18,000.00 simple discount note is discounted at 8.00% for 150 days. Find its annualized effective rate on proceeds.

Calculation

  1. 7.74%
  2. 8.28%
  3. 3.33%
  4. 8.00%
Slater, Ch. 17, pp. 451-457
54A $8,400.00 simple discount note is discounted at 9.50% for 75 days. Find its annualized effective rate on proceeds.

Calculation

  1. 1.98%
  2. 9.50%
  3. 9.69%
  4. 9.32%
Slater, Ch. 17, pp. 451-457
55A $25,000.00 simple discount note is discounted at 5.40% for 200 days. Find its annualized effective rate on proceeds.

Calculation

  1. 3.00%
  2. 5.57%
  3. 5.24%
  4. 5.40%
Slater, Ch. 17, pp. 451-457
56A business needs net proceeds of $5,000.00. What face value should a simple discount note have at 6.00% for 90 days? Report the computed face value to the nearest cent.

Calculation

  1. $5,076.14
  2. $4,926.11
  3. $5,075.00
  4. $5,000.00
Slater, Ch. 17, pp. 451-457
57A business needs net proceeds of $9,000.00. What face value should a simple discount note have at 7.50% for 120 days? Report the computed face value to the nearest cent.

Calculation

  1. $9,230.77
  2. $9,000.00
  3. $9,225.00
  4. $8,780.49
Slater, Ch. 17, pp. 451-457
58A business needs net proceeds of $14,500.00. What face value should a simple discount note have at 8.00% for 150 days? Report the computed face value to the nearest cent.

Calculation

  1. $14,983.33
  2. $14,032.26
  3. $15,000.00
  4. $14,500.00
Slater, Ch. 17, pp. 451-457
59A business needs net proceeds of $7,500.00. What face value should a simple discount note have at 9.50% for 75 days? Report the computed face value to the nearest cent.

Calculation

  1. $7,651.43
  2. $7,500.00
  3. $7,648.44
  4. $7,354.44
Slater, Ch. 17, pp. 451-457
60A business needs net proceeds of $22,000.00. What face value should a simple discount note have at 5.40% for 200 days? Report the computed face value to the nearest cent.

Calculation

  1. $22,000.00
  2. $22,680.41
  3. $22,660.00
  4. $21,359.22
Slater, Ch. 17, pp. 451-457
61A $6,000.00 simple discount note for 90 days has a bank discount of $90.00. Find its annual bank discount rate.

Calculation

  1. 72.00%
  2. 1.50%
  3. 6.09%
  4. 6.00%
Slater, Ch. 17, pp. 451-457
62A $12,500.00 simple discount note for 120 days has a bank discount of $312.50. Find its annual bank discount rate.

Calculation

  1. 7.69%
  2. 2.50%
  3. 90.00%
  4. 7.50%
Slater, Ch. 17, pp. 451-457
63A $18,000.00 simple discount note for 150 days has a bank discount of $600.00. Find its annual bank discount rate.

Calculation

  1. 96.00%
  2. 3.33%
  3. 8.00%
  4. 8.28%
Slater, Ch. 17, pp. 451-457
64A $8,400.00 simple discount note for 75 days has a bank discount of $166.25. Find its annual bank discount rate.

Calculation

  1. 114.00%
  2. 9.50%
  3. 9.69%
  4. 1.98%
Slater, Ch. 17, pp. 451-457
65A $25,000.00 simple discount note for 200 days has a bank discount of $750.00. Find its annual bank discount rate.

Calculation

  1. 64.80%
  2. 3.00%
  3. 5.57%
  4. 5.40%
Slater, Ch. 17, pp. 451-457
66A simple discount note has face value $6,000.00, discount rate 6.00%, and bank discount $76.00. Find its term in days; round any fractional day UP.

Calculation

  1. 81 days
  2. 78 days
  3. 86 days
  4. 76 days
Slater, Ch. 17, pp. 451-457
67A simple discount note has face value $12,500.00, discount rate 7.50%, and bank discount $167.00. Find its term in days; round any fractional day UP.

Calculation

  1. 67 days
  2. 65 days
  3. 66 days
  4. 64 days
Slater, Ch. 17, pp. 451-457
68A simple discount note has face value $18,000.00, discount rate 8.00%, and bank discount $259.00. Find its term in days; round any fractional day UP.

Calculation

  1. 67 days
  2. 64 days
  3. 65 days
  4. 66 days
Slater, Ch. 17, pp. 451-457
69A simple discount note has face value $8,400.00, discount rate 9.50%, and bank discount $145.00. Find its term in days; round any fractional day UP.

Calculation

  1. 65 days
  2. 67 days
  3. 68 days
  4. 66 days
Slater, Ch. 17, pp. 451-457
70A simple discount note has face value $25,000.00, discount rate 5.40%, and bank discount $612.00. Find its term in days; round any fractional day UP.

Calculation

  1. 166 days
  2. 163 days
  3. 175 days
  4. 164 days
Slater, Ch. 17, pp. 451-457
71A 120-day simple-interest note at 6.00% is settled by a balloon payment of $5,100.00. Find its original principal.

Calculation

  1. $5,000.00
  2. $4,998.00
  3. $100.00
  4. $5,100.00
Slater, Ch. 17, pp. 454-455
72A 90-day simple-interest note at 8.00% is settled by a balloon payment of $7,344.00. Find its original principal.

Calculation

  1. $7,197.12
  2. $7,344.00
  3. $7,200.00
  4. $144.00
Slater, Ch. 17, pp. 454-455
73A 160-day simple-interest note at 7.50% is settled by a balloon payment of $12,400.00. Find its original principal.

Calculation

  1. $400.00
  2. $12,000.00
  3. $11,986.67
  4. $12,400.00
Slater, Ch. 17, pp. 454-455
74A 180-day simple-interest note at 4.50% is settled by a balloon payment of $16,360.00. Find its original principal.

Calculation

  1. $16,360.00
  2. $360.00
  3. $15,991.90
  4. $16,000.00
Slater, Ch. 17, pp. 454-455
75A 100-day simple-interest note at 9.00% is settled by a balloon payment of $9,635.00. Find its original principal.

Calculation

  1. $235.00
  2. $9,635.00
  3. $9,394.13
  4. $9,400.00
Slater, Ch. 17, pp. 454-455
76A simple-interest note with principal $7,400.00 matures for $7,548.00 after 120 days. What annual interest rate does it carry?

Calculation

  1. 5.88%
  2. 0.50%
  3. 2.00%
  4. 6.00%
Slater, Ch. 17, pp. 454-455
77A simple-interest note with principal $9,600.00 matures for $9,792.00 after 90 days. What annual interest rate does it carry?

Calculation

  1. 7.84%
  2. 8.00%
  3. 2.00%
  4. 0.67%
Slater, Ch. 17, pp. 454-455
78A simple-interest note with principal $14,400.00 matures for $14,880.00 after 160 days. What annual interest rate does it carry?

Calculation

  1. 7.50%
  2. 3.33%
  3. 0.62%
  4. 7.26%
Slater, Ch. 17, pp. 454-455
79A simple-interest note with principal $18,400.00 matures for $18,814.00 after 180 days. What annual interest rate does it carry?

Calculation

  1. 4.50%
  2. 0.38%
  3. 2.25%
  4. 4.40%
Slater, Ch. 17, pp. 454-455
80A simple-interest note with principal $11,800.00 matures for $12,095.00 after 100 days. What annual interest rate does it carry?

Calculation

  1. 9.00%
  2. 8.78%
  3. 0.75%
  4. 2.50%
Slater, Ch. 17, pp. 454-455
81A simple-interest note for $8,600.00 at 6.00% matures for $8,772.00. Find the term in ordinary-interest days.

Calculation

  1. 119 days
  2. 10 days
  3. 121 days
  4. 120 days
Slater, Ch. 17, pp. 454-455
82A simple-interest note for $10,800.00 at 8.00% matures for $11,016.00. Find the term in ordinary-interest days.

Calculation

  1. 89 days
  2. 90 days
  3. 91 days
  4. 7.5 days
Slater, Ch. 17, pp. 454-455
83A simple-interest note for $15,600.00 at 7.50% matures for $16,120.00. Find the term in ordinary-interest days.

Calculation

  1. 13.3333 days
  2. 160 days
  3. 159 days
  4. 161 days
Slater, Ch. 17, pp. 454-455
84A simple-interest note for $19,600.00 at 4.50% matures for $20,041.00. Find the term in ordinary-interest days.

Calculation

  1. 181 days
  2. 179 days
  3. 180 days
  4. 15 days
Slater, Ch. 17, pp. 454-455
85A simple-interest note for $13,000.00 at 9.00% matures for $13,325.00. Find the term in ordinary-interest days.

Calculation

  1. 99 days
  2. 101 days
  3. 100 days
  4. 8.33333 days
Slater, Ch. 17, pp. 454-455
86A hypothetical $10,000.00 Treasury bill has a 5.20% annual discount rate and a 13-week term. Use T = weeks/52. What is its purchase price?

Calculation

  1. $10,000.00
  2. $10,130.00
  3. $130.00
  4. $9,870.00
Slater, Ch. 17, pp. 452-453
87A hypothetical $20,000.00 Treasury bill has a 6.50% annual discount rate and a 26-week term. Use T = weeks/52. What is its purchase price?

Calculation

  1. $20,000.00
  2. $20,650.00
  3. $650.00
  4. $19,350.00
Slater, Ch. 17, pp. 452-453
88A hypothetical $15,000.00 Treasury bill has a 4.80% annual discount rate and a 4-week term. Use T = weeks/52. What is its purchase price?

Calculation

  1. $15,055.38
  2. $14,944.62
  3. $55.38
  4. $15,000.00
Slater, Ch. 17, pp. 452-453
89A hypothetical $25,000.00 Treasury bill has a 7.40% annual discount rate and a 13-week term. Use T = weeks/52. What is its purchase price?

Calculation

  1. $25,000.00
  2. $25,462.50
  3. $24,537.50
  4. $462.50
Slater, Ch. 17, pp. 452-453
90A hypothetical $5,000.00 Treasury bill has a 6.00% annual discount rate and a 26-week term. Use T = weeks/52. What is its purchase price?

Calculation

  1. $4,850.00
  2. $5,000.00
  3. $5,150.00
  4. $150.00
Slater, Ch. 17, pp. 452-453
91A hypothetical $10,000.00 Treasury bill is offered at a 5.20% discount rate for 13 weeks. Using weeks/52, find its annualized effective yield on the purchase price.

Calculation

  1. 1.30%
  2. 5.20%
  3. 5.13%
  4. 5.27%
Slater, Ch. 17, pp. 452-453
92A hypothetical $20,000.00 Treasury bill is offered at a 6.50% discount rate for 26 weeks. Using weeks/52, find its annualized effective yield on the purchase price.

Calculation

  1. 3.25%
  2. 6.50%
  3. 6.30%
  4. 6.72%
Slater, Ch. 17, pp. 452-453
93A hypothetical $15,000.00 Treasury bill is offered at a 4.80% discount rate for 4 weeks. Using weeks/52, find its annualized effective yield on the purchase price.

Calculation

  1. 4.82%
  2. 4.78%
  3. 4.80%
  4. 0.37%
Slater, Ch. 17, pp. 452-453
94A hypothetical $25,000.00 Treasury bill is offered at a 7.40% discount rate for 13 weeks. Using weeks/52, find its annualized effective yield on the purchase price.

Calculation

  1. 7.40%
  2. 1.85%
  3. 7.27%
  4. 7.54%
Slater, Ch. 17, pp. 452-453
95A hypothetical $5,000.00 Treasury bill is offered at a 6.00% discount rate for 26 weeks. Using weeks/52, find its annualized effective yield on the purchase price.

Calculation

  1. 6.00%
  2. 5.83%
  3. 6.19%
  4. 3.00%
Slater, Ch. 17, pp. 452-453
96A 150-day note dated February 12, 2025 is sold to a bank on April 16, 2025. How many days are in the bank discount period?

Calculation

  1. 150 days
  2. 88 days
  3. 63 days
  4. 87 days
Slater, Ch. 17, pp. 458-460
97A 180-day note dated May 03, 2024 is sold to a bank on August 03, 2024. How many days are in the bank discount period?

Calculation

  1. 92 days
  2. 88 days
  3. 89 days
  4. 180 days
Slater, Ch. 17, pp. 458-460
98A 120-day note dated October 07, 2025 is sold to a bank on November 17, 2025. How many days are in the bank discount period?

Calculation

  1. 79 days
  2. 120 days
  3. 41 days
  4. 80 days
Slater, Ch. 17, pp. 458-460
99A 210-day note dated January 15, 2026 is sold to a bank on May 12, 2026. How many days are in the bank discount period?

Calculation

  1. 117 days
  2. 210 days
  3. 93 days
  4. 94 days
Slater, Ch. 17, pp. 458-460
100A 160-day note dated November 19, 2024 is sold to a bank on February 01, 2025. How many days are in the bank discount period?

Calculation

  1. 87 days
  2. 86 days
  3. 74 days
  4. 160 days
Slater, Ch. 17, pp. 458-460
101A $8,000.00, 120-day note bears 6.00% simple interest. It is sold after 45 days to a bank charging 8.00% discount. What is the bank discount?

Calculation

  1. $217.60
  2. $160.00
  3. $133.33
  4. $136.00
Slater, Ch. 17, pp. 458-460
102A $12,500.00, 180-day note bears 7.50% simple interest. It is sold after 100 days to a bank charging 6.50% discount. What is the bank discount?

Calculation

  1. $468.75
  2. $180.56
  3. $421.48
  4. $187.33
Slater, Ch. 17, pp. 458-460
103A $24,000.00, 150-day note bears 9.00% simple interest. It is sold after 90 days to a bank charging 9.50% discount. What is the bank discount?

Calculation

  1. $900.00
  2. $985.63
  3. $394.25
  4. $380.00
Slater, Ch. 17, pp. 458-460
104A $15,000.00, 210-day note bears 5.50% simple interest. It is sold after 135 days to a bank charging 7.00% discount. What is the bank discount?

Calculation

  1. $225.77
  2. $218.75
  3. $632.15
  4. $481.25
Slater, Ch. 17, pp. 458-460
105A $32,000.00, 240-day note bears 8.00% simple interest. It is sold after 150 days to a bank charging 9.00% discount. What is the bank discount?

Calculation

  1. $758.40
  2. $2,022.40
  3. $720.00
  4. $1,706.67
Slater, Ch. 17, pp. 458-460
106A $9,200.00, 120-day note bears 6.00% simple interest. It is sold after 45 days to a bank charging 8.00% discount. What are the seller's proceeds?

Calculation

  1. $9,384.00
  2. $9,227.60
  3. $9,133.76
  4. $9,043.60
Slater, Ch. 17, pp. 458-460
107A $13,700.00, 180-day note bears 7.50% simple interest. It is sold after 100 days to a bank charging 6.50% discount. What are the seller's proceeds?

Calculation

  1. $13,751.80
  2. $14,008.44
  3. $13,494.69
  4. $14,213.75
Slater, Ch. 17, pp. 458-460
108A $25,200.00, 150-day note bears 9.00% simple interest. It is sold after 90 days to a bank charging 9.50% discount. What are the seller's proceeds?

Calculation

  1. $26,145.00
  2. $24,786.04
  3. $25,731.04
  4. $25,110.09
Slater, Ch. 17, pp. 458-460
109A $16,200.00, 210-day note bears 5.50% simple interest. It is sold after 135 days to a bank charging 7.00% discount. What are the seller's proceeds?

Calculation

  1. $16,475.92
  2. $16,719.75
  3. $16,037.03
  4. $15,956.17
Slater, Ch. 17, pp. 458-460
110A $33,200.00, 240-day note bears 8.00% simple interest. It is sold after 150 days to a bank charging 9.00% discount. What are the seller's proceeds?

Calculation

  1. $34,970.67
  2. $34,183.83
  3. $32,872.43
  4. $32,413.16
Slater, Ch. 17, pp. 458-460
111A $10,400.00, 120-day note bears 6.00% simple interest. It is sold after 45 days to a bank charging 8.00% discount. What is the seller's gain above the original principal?

Calculation

  1. $176.80
  2. $10,431.20
  3. $208.00
  4. $31.20
Slater, Ch. 17, pp. 458-460
112A $14,900.00, 180-day note bears 7.50% simple interest. It is sold after 100 days to a bank charging 6.50% discount. What is the seller's gain above the original principal?

Calculation

  1. $15,235.46
  2. $558.75
  3. $335.46
  4. $223.29
Slater, Ch. 17, pp. 458-460
113A $26,400.00, 150-day note bears 9.00% simple interest. It is sold after 90 days to a bank charging 9.50% discount. What is the seller's gain above the original principal?

Calculation

  1. $556.33
  2. $990.00
  3. $433.68
  4. $26,956.33
Slater, Ch. 17, pp. 458-460
114A $17,400.00, 210-day note bears 5.50% simple interest. It is sold after 135 days to a bank charging 7.00% discount. What is the seller's gain above the original principal?

Calculation

  1. $261.89
  2. $17,696.36
  3. $296.36
  4. $558.25
Slater, Ch. 17, pp. 458-460
115A $34,400.00, 240-day note bears 8.00% simple interest. It is sold after 150 days to a bank charging 9.00% discount. What is the seller's gain above the original principal?

Calculation

  1. $1,019.39
  2. $35,419.39
  3. $1,834.67
  4. $815.28
Slater, Ch. 17, pp. 458-460
116A non-interest-bearing note for $11,600.00 is sold with 75 days remaining until maturity. The bank uses a 8.00% discount rate. What proceeds does the seller receive?

Calculation

  1. $11,793.33
  2. $11,406.67
  3. $11,600.00
  4. $193.33
Slater, Ch. 17, pp. 458-460
117A non-interest-bearing note for $16,100.00 is sold with 80 days remaining until maturity. The bank uses a 6.50% discount rate. What proceeds does the seller receive?

Calculation

  1. $232.56
  2. $15,867.44
  3. $16,100.00
  4. $16,332.56
Slater, Ch. 17, pp. 458-460
118A non-interest-bearing note for $27,600.00 is sold with 60 days remaining until maturity. The bank uses a 9.50% discount rate. What proceeds does the seller receive?

Calculation

  1. $28,037.00
  2. $27,163.00
  3. $437.00
  4. $27,600.00
Slater, Ch. 17, pp. 458-460
119A non-interest-bearing note for $18,600.00 is sold with 75 days remaining until maturity. The bank uses a 7.00% discount rate. What proceeds does the seller receive?

Calculation

  1. $18,328.75
  2. $271.25
  3. $18,871.25
  4. $18,600.00
Slater, Ch. 17, pp. 458-460
120A non-interest-bearing note for $35,600.00 is sold with 90 days remaining until maturity. The bank uses a 9.00% discount rate. What proceeds does the seller receive?

Calculation

  1. $35,600.00
  2. $801.00
  3. $36,401.00
  4. $34,799.00
Slater, Ch. 17, pp. 458-460

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