Math

Question 1

Is the concept that a sum of money is worth more now than the sum will be at a future date fue to it’s earning potential in the interem/period

Answer 1

Time Value of Money

Question 2

It is the core principle of finance

Answer 2

Time Value of Money

Question 3

Earning Potential of Money if an individual invested earlier

Answer 3

Time Value of Money

Question 4

An increase in the prices of goods and services

Answer 4

Inflation

Question 5

The sum by which the original principal has been increased by the end of the contract

Answer 5

Compund Interest

Question 6

The total accumulated amount at the end of the period, the original principal plus the compound interest is called?

Answer 6

Compund Amount

Question 7

The time between successive interest computations

Answer 7

Coversion Period

Question 8

How to get conversion period

Answer 8

CP= t×n
t-time
n- number of times interest is compunded per year

Question 9

the interest is figured on your principal alone

Answer 9

Simple Interest

Question 10

The interest you earn on the investment will also earn interest.

Answer 10

Compund Interest

Question 11

Formula of Compound Interest

Answer 11

Amount= Principal (1+r/n)^nt

Question 12

The sum of money that must be invested in order to achieve a specific future goal. It is defined as the ______ which you would have to invest now at a given interest rate, so that it will amount to some predetermined future sum of money

Answer 12

Present Value

Question 13

The amount tajt will accrue over time when the sum is invested

Answer 13

Future Value

Question 14

The difference between the future value and present calue

Answer 14

Compind Discount

Question 15

Formula of Compund Discount

Answer 15

CD= Future Value- Present Value

Question 16

Does not take into account any fees on compounding of interest. It is often the rate that is stayed by financial institutions

Answer 16

Nominal Interest

Question 17

The real rwturn on a saving account or any interest-paying investment when the effevts of compunding over time are taken into account. It is also reflects the real percentage rate owed in interest on a loan, a credit card or any other debt

Answer 17

Effective Interest Rate

Question 18

How to get annualized Rate?

Answer 18

Annualized Rate= Growth/ Interest Rate

Question 19

How to get the Growth?

Answer 19

Growth= Last Compounded Amount- Principal/ Principal ×100

Question 20

Sequence of payments usually equal, made at regular intervals

Answer 20

Annuity

Question 21

Annuity is divided into:

Answer 21

1. Annuity Certain
2. Contingent Annuity/ Annuity Uncertain

Question 22

The period time between twoo successive payments date

Answer 22

Payment Interval

Question 23

The beggining of the first payment interval and the end of the last payment interval is called?

Answer 23

Term of Annuity

Question 24

Calssifications of Annuity by term

Answer 24

1. Annuity Certain
2. Perpetuity
3. Contingent Annuity / Annuity Uncertain

Question 25

When the term of the annuity is fixed.

Answer 25

Annuity Certain

Question 26

Length of the term is infinite

Answer 26

Perpetuity

Question 27

The term begins on a definite date, but the ending date is not fixed in advance

Answer 27

Contingent Annuity/ Annuity Uncertain

Question 28

Calssifications of Annuities by Dates of Payments

Answer 28

1. Ordinary Annuity 2. Annuity Due

Question 29

Perodic payments are made at the end of the payment interval

Answer 29

Ordinary Annuity

Question 30

Periodic Payments are made at the beggining of each payment interval

Answer 30

Annuity Due

Question 31

Calssifications of Annuities by Length of Payment Interval and Interest Compunding period

Answer 31

1. Simple Annuity 2. Complex Annuity / General Annuity

Question 32

The payment interval coincides with the interest compounding period

Answer 32

Simple Annuity

Question 33

The payment interval does not coincide with the interest compounding peroid

Answer 33

Conplex Annuity or General Annuity

Question 34

Formula of Ordinary Annuity

Answer 34

FVoa= P[(1+r)^n/r]

Question 35

Formula of Annuity Due

Answer 35

FVad= P[(1+r)^n/r] × (1+r)