Math of Finance

Question 1

is a quick and easy method of calculating the interest charge on a loan. It is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.

Answer 1

Simple Interest

Question 2

is the capital or sum of money borrowed or invested.

Answer 2

Principal

Question 3

it is calculate as a percent of the principal

Answer 3

Interest

Question 4

This is the fraction part of the principal that is paid on the loan or investment, which is usually expressed as percent

Answer 4

Rate

Question 5

The number of years for which the money is borrowed or invested

Answer 5

Time

Question 6

The sum composed of the principal and interest accumulated over a certain period of time

Answer 6

Future Value/Maturity Value

Question 7

Interest Earned

Answer 7

I

Question 8

Interest Rate

Answer 8

r

Question 9

number of years

Answer 9

t

Question 10

Principal or present value

Answer 10

P

Question 11

future vale or accumulated value

Answer 11

F

Question 12

I = ?

Answer 12

Prt

Question 13

F = ?

Answer 13

P + I
P(1+rt)

Question 14

is an interest computed every conversion period whose principal amount includes the specified interest earned every end of the conversion date.

Answer 14

Compound Interest

Question 15

This is the interest resulting from the periodic addition of simple interest to the principal amount.

Answer 15

Compound Interest

Question 16

This is an accumulated amount composed of the principal and the compound interest.

Answer 16

Compound Amount

Question 17

This refers to the number of times in a year the interest will be compounded.

Answer 17

Conversion Period

Question 18

If interest is compounded either annually, semi- annually, quarterly, or monthly, basic compound interest

Answer 18

F = P * (1 + j/m) ^ (mt)

I = F - P or F = P * (1 + i) ^ n

Question 19

I

Answer 19

Compound Interest

Question 20

i

Answer 20

period rate (i = j/m)

Question 21

n

Answer 21

number of conversion periods for the whole term (n = mt)

Question 22

m

Answer 22

number of conversion periods

Question 23

t

Answer 23

time or term of investment which is expressed in years

Question 24

j

Answer 24

• nominal rate of interest per year (r in simple interest)

Question 25

is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder’s promise to the card issuer to pay them for the amounts so paid plus the other agreed charges.

Answer 25

Credit Card

Question 26

, is essentially the cost of spending money on your credit card, including basic interest rates as well as any other relevant fees.

Answer 26

APR or Annual Percentage Rate

Question 27

One thing you should avoid doing at all costs is withdrawing cash from an ATM using your credit card. If you do so, you will rack up hefty cash advance charges and so unless it’s absolutely necessary to use your credit card, you should always stick to using your debit card to take cash out.

Answer 27

Cash Advance Fees

Question 28

are unity of equity, or ownership stake, in a company.

Answer 28

Stocks

Question 29

means the equality of being fair and impartial.

Answer 29

Equity

Question 30

are simply loans made to an organization, They are a form of debt and appear as liabilities in the organization’s balance sheet.

Answer 30

Bonds

Question 31

Bonds are a type of investment known as a?

Answer 31

Debt Security