Financial Management

Question 1

the effective handling of money through planning,
organizing, directing and controlling funds in a
corporation or for an individual

Answer 1

Financial Management

Question 2

amount of money paid or earned for the use of money on
the original principal only

Answer 2

Simple interest

Question 3

generally applied to loans or money invested to short-term (usually one year or less).

Answer 3

Simple Interest

Question 4

interest on a loan or investment is calculated only on the
amount initially invested or loaned

Answer 4

SImple interest

Question 5

What is the formula for S.I.

Answer 5

S.I. = PrT

Question 6

How many days in ordinary interest

Answer 6

360 days (30 per month)

Question 7

How many days in exact interest

Answer 7

365 days (366 if leap year)

Question 8

If not specified in a problem, what type of Simple Interest applies

Answer 8

Ordinary interest

Question 9

total amount owed or the total value of an investment after a
given amount of time.

Answer 9

Future Value

Question 10

interest is earned not only on the initial amount invested,
but also on any interest.

Answer 10

Compound Interest

Question 11

interest is earned on top of interest and thus
“compounds”

Answer 11

Compound Interest

Question 12

The higher the number of compounding periods, the
greater the amount of compound interest

Answer 12

Compound Interest

Question 13

a series of payments made at equal intervals

Answer 13

Annuity

Question 14

can be classified by the frequency of payment dates. The
payments (deposits) may be made weekly, monthly, quarterly, yearly,
or at any other regular interval of time.

Answer 14

Annuity

Question 15

examples are regular deposits to a savings account,
monthly home mortgage payments, monthly insurance payments and
pension payments

Answer 15

Annuity

Question 16

Type of annuity; payments are made at the end
of each period.

Answer 16

Ordinary annuity

Question 17

Type of annuity; Payments are made at the
beginning of each period

Answer 17

Annuity due

Question 18

also known as annuity-immediate

Answer 18

Ordinary annuity

Question 19

s a loan in which the borrower pledges some asset (e.g. a car or property)
as collateral for the loan, which then becomes a secured debt owed to the creditor who gives
the loan.

Answer 19

Secured Loan

Question 20

a loan that doesn’t require any type of collateral. Instead of relying on
a borrower’s assets as security, lenders approve unsecured loans based on a borrower’s
credit worthiness.

Answer 20

Unsecured Loans

Question 21

Type of annuity; examples of this are rentals, leases,
and insurance payments

Answer 21

Annuity Due

Question 22

annuities where payments are made at the
beginning of each period and the compounding period is EQUAL to the
payment period.

Answer 22

Simple Annuities Due

Question 23

annuities where payments are made at the
beginning of each period but the compounding period is NOT equal to the
payment period

Answer 23

General Annuities Due

Question 24

The first payment is not made
at the beginning nor end of the
payment interval, but a later
date

Answer 24

Deferred Annuities

Question 25

the length
of time from the present to the
beginning of the first payment
interval.

Answer 25

Deferment period