Use This Information to Answer the Following Question A Single Deposit of $2,000 Made at the Beginning of Periods

question 71

Multiple Choice

Use this information to answer the following question. $\begin{array}{|l|l|l|}\hline\text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \text { Future Value of Ordinary Annuity of } \\&&\$ 1 \text { at } 12 \text { Percent }\\ \hline 1 & 1.120 & 1.000 \\\hline 2 & 1.254 & 2.120 \\\hline 3 & 1.405 & 3.374 \\\hline\end{array}$ A single deposit of $2,000 made at the beginning of period 1 would grow to how much at the end of three years?

• A) $2,240.00
• B) $2,810.00
• C) $2,508.00
• D) $6,748.00

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Definitions:

Quarterly Compounded

An interest calculation method where interest is added to the principal every quarter, increasing the amount of interest earned or paid.

Nominal Rate

Nominal Rate refers to the interest rate before adjustments for inflation or other factors. It is the rate quoted on loans and savings without taking into account the real purchasing power of the money.

GIC

Guaranteed Investment Certificate, a Canadian investment that offers a guaranteed rate of return over a fixed period.

Maturity Value

The total amount that will be paid out or received at the end of a financial instrument's term, including principal and interest.