ECON

Question 1

Amount of money earned by a given capital.

Answer 1

Interest

Question 2

Interest directly proportional to the length of time and the amount of principal borrowed.

Answer 2

Simple Interest

Question 3

Computed on the basis of one banker’s year.

Answer 3

Ordinary Simple Interest

Question 4

1 banker’s year = (?) days

Answer 4

12 months (30 days each)
= 360 DAYS

Question 5

Computed based on exact number of days.

Answer 5

Exact Simple Interest

Question 6

Days in a Leap Year?

Answer 6

366

Question 7

Interest is computed every end of each interest period and the interest earned for that period is added to the principal.

Answer 7

Compound Interest

Question 8

Specifies the rate of interest and the number of interest periods per year.

Answer 8

Nominal Rate of Interest

Question 9

The actual rate of interest on the principal for one year.

Answer 9

Effective Rate of Interest

Question 10

Consists of a series of equal payments made at equal intervals of time.

Answer 10

Annuity

Question 11

Equal payments are made at the end of each payment period starting from the first period.

Answer 11

Ordinary Annuity

Question 12

Payment of the first amount is deferred a certain number of periods after the first.

Answer 12

Deferred Annuity

Question 13

Payments are made at the start of each period, beginning from the first period.

Answer 13

Annuity Due

Question 14

Periodic payments continue indefinitely.

Answer 14

Perpetuity

Question 15

A sequence consisting of end-of-period payments, where each payment increases or decreases by a constant value.

Answer 15

Uniform Arithmetic Gradient

Question 16

A sequence consisting of end-of-period payments, where each payment increases or decreases by a fixed percentage.

Answer 16

Geometric Gradient

Question 17

Sum of the first cost and the present worth of all future payments and replacements which is assumed to continue forever.

Answer 17

Capitalized Cost

Question 18

Increase in the amount of money needed to purchase same amount of goods or services.

Answer 18

Inflation

Question 19

Increase in the amount of money needed to purchase same amount of goods or services.

Answer 19

Inflation

Question 20

Decrease in the value of an asset due to usage or passage of time.

Answer 20

Depreciation

Question 21

Depreciation per year is constant and with an Interest rate, I.

Answer 21

Sinking Fund Method

Question 22

Method of determining when costs exactly equal revenue

Cost = Revenue

Answer 22

Breakeven Analysis

Question 23

Attempts to identify the relationship between the cost and the benefits of a proposed project.

Answer 23

Benefit-Cost Ratio

Question 24

The break-even interest rate, i, which equates the present worth of a project’s cash outflows to the present worth of its cash inflows.

Answer 24

Rate of Return

Question 25

Measures the yield as a percentage of investment over the life of a project.

Answer 25

Rate of Return

Question 26

A minimum return the company will accept on the money it invests (usually calculated by financial analysts).

Answer 26

Minimum Attractive Rate of Return (MARR)

Question 27

Period required to recover the total investment.

Answer 27

Recovery Period

Question 28

Length of time required to recover fixed capital.

Answer 28

Payout/Payback Period

Question 29

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.

Answer 29

Stock

Question 30

An interest transaction where the price of the corresponding loan is set down by subtracting the so-called discount from the amount due.

Answer 30

Simple Discount Rate

Question 31

Conditions to determine a Leap Year

Answer 31

1. Should be divisible by 4. 2. Should not be divisible by 100, otherwise, should be divisible by 400 instead. then it’s a Leap Year.