Chap 12

Question 1

__ means that the amount interest is computed only once during the term of the investment or borrowing.

Answer 1

Simple Interest

Question 2

Indicates that the interest of one compounding period is added to the principal of the prior period to form the new principal as basis for computing the interest of succeeding periods

Answer 2

Compund interest

Question 3

Future value (FV) otherwise knows as ____?

Answer 3

Compound amount

Question 4

Future value indicates ___

Answer 4

Confounding interest

Question 5

___ is the rate of investment or borrowings.

Answer 5

Nominal rate

Question 6

___ refers to the period of conversion made during the year.

Answer 6

Compounding period

Question 7

___ is the number of times the interest is added to the principal during the year.

Answer 7

Frequency of conversion

Question 8

___ refers to the number of times an interest is computed during the term of the investment.

Answer 8

Total compounding period (n)

Question 9

___ refers to the interest rate per compounding period.

Answer 9

Periodic interest rate (I)

Question 10

___ refers to the series of consecutive equal investments or payments made at an equal interval of time.

Answer 10

Annuity

Question 11

Periodic investments or payments are made at the end of the periodic interval. This kind of annuity is called ___?

Answer 11

Ordinary annuity

Question 12

When the periodic investments or payments are made at the beginning of the periodic interval, the annuity is called ____?

Answer 12

Annuity due

Question 13

The term ___ simply refers to the value of the money at present.

Answer 13

Present value