Everything

Question 1

What is the interest conversion period? What is it denoted by?

Answer 1

The period between two successive interest payments, denoted by p.

Question 2

What is an alternative name for interest conversion period?

Answer 2

Quotient of the time unit.

Question 3

What denotes the interest per conversion period

Answer 3

i lower p

Question 4

What denotes the nominal interest rate?

Answer 4

i upper p

Question 5

If the nominal interest rate is 4% p.a compounded quarterly, how much interest is paid per quarter?

Answer 5

1%

Question 6

If the nominal interest rate is 8% p.a compounded quarterly, how do you find the annual effective rate?

Answer 6

Divide 8% by 4 =2%

Find (1.02)^4 which gives the AER. (8.243%)

Question 7

If interest is paid in advance, interest equals..?

Answer 7

Equals the rate of discount d (also applies pthly)

Question 8

If m>n what is the inequality between i upper m and i upper n?

Answer 8

i upper m > i upper n

Question 9

What relates the interest rate to the discount rate?

Answer 9

1(1+i) = 1-d

Question 10

What is the formula for i given the force of interest?

Answer 10

i = e^δ -1

Question 11

What is the formula for δ given the rate of interest?

Answer 11

δ = ln(1+i)

Question 12

What is the formula for a compound discount loan of 1 year?

Answer 12

Future value x (1-d) = present value

Question 13

What is the formula for the discount rate given the force of interest?

Answer 13

d = 1-e^(-δ)

Question 14

What is the formula for i upper p given the force of interest?

Answer 14

i upper p = p(e^(δ/p)-1)

Question 15

What is the formula for d upper p given the force of interest?

Answer 15

d upper p = p(1 - e^(-δ/p))

Question 16

What is the present value for an annuity paying 50 pounds every month with i upper 12 = 0.05 for 3 years?

Answer 16

600 times a angle 3 upper 12

Question 17

What is the formula for i given d?

Answer 17

i = d/(1-d)

Question 18

What is the formula for d given i?

Answer 18

i/(1+i)

Question 19

What formula relates d to d upper p?

Answer 19

1-d = (1-(d upper p)/p)^p

Question 20

What formula relates a angle n to s angle n?

Answer 20

a angle n = v^n * s angle n

Question 21

What formula relates a double dot angle n to a angle n?

Answer 21

a double dot angle n = (i/d)*(a angle n)

Question 22

What formula relates s double dot angle n to s angle n?

Answer 22

s double dot angle n = (i/d)*(s angle n)

Question 23

What is the present value of a perpetuity immediate?

Answer 23

a angle infinite = 1/i

Question 24

What is the present value of a perpetuity due?

Answer 24

(1+i)/i