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Management Science > Math > Flashcards

Math Flashcards

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1
Q

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

A

Time Value of Money

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2
Q

It is the core principle of finance

A

Time Value of Money

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3
Q

Earning Potential of Money if an individual invested earlier

A

Time Value of Money

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4
Q

An increase in the prices of goods and services

A

Inflation

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5
Q

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

A

Compund Interest

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6
Q

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

A

Compund Amount

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7
Q

The time between successive interest computations

A

Coversion Period

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8
Q

How to get conversion period

A

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

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9
Q

the interest is figured on your principal alone

A

Simple Interest

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10
Q

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

A

Compund Interest

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11
Q

Formula of Compound Interest

A

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

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12
Q

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

A

Present Value

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13
Q

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

A

Future Value

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14
Q

The difference between the future value and present calue

A

Compind Discount

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15
Q

Formula of Compund Discount

A

CD= Future Value- Present Value

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16
Q

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

A

Nominal Interest

17
Q

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

A

Effective Interest Rate

18
Q

How to get annualized Rate?

A

Annualized Rate= Growth/ Interest Rate

19
Q

How to get the Growth?

A

Growth= Last Compounded Amount- Principal/ Principal ×100

20
Q

Sequence of payments usually equal, made at regular intervals

A

Annuity

21
Q

Annuity is divided into:

A
  1. Annuity Certain
  2. Contingent Annuity/ Annuity Uncertain
22
Q

The period time between twoo successive payments date

A

Payment Interval

23
Q

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

A

Term of Annuity

24
Q

Calssifications of Annuity by term

A
  1. Annuity Certain
  2. Perpetuity
  3. Contingent Annuity / Annuity Uncertain
25
Q

When the term of the annuity is fixed.

A

Annuity Certain

26
Q

Length of the term is infinite

A

Perpetuity

27
Q

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

A

Contingent Annuity/ Annuity Uncertain

28
Q

Calssifications of Annuities by Dates of Payments

A
  1. Ordinary Annuity
  2. Annuity Due
29
Q

Perodic payments are made at the end of the payment interval

A

Ordinary Annuity

30
Q

Periodic Payments are made at the beggining of each payment interval

A

Annuity Due

31
Q

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

A
  1. Simple Annuity
  2. Complex Annuity / General Annuity
32
Q

The payment interval coincides with the interest compounding period

A

Simple Annuity

33
Q

The payment interval does not coincide with the interest compounding peroid

A

Conplex Annuity or General Annuity

34
Q

Formula of Ordinary Annuity

A

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

35
Q

Formula of Annuity Due

A

FVad= P[(1+r)^n/r] × (1+r)

Management Science (3 decks)

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