Module 7: Mathematics of Buying ang Selling

Question 1

is calculated on the original principal amount and is paid at the end of the load

Answer 1

simple interest

Question 2

is the fee or rent that lenders charge to borrowers for the temporary use of borrowed money

Answer 2

interest

Question 3

is the amount borrowed

Answer 3

principal

Question 4

is the percentage of the principal that will be charged for a specified period of time (e.g. daily weekly, monthly, yearly, etc.)

Answer 4

rate of interest

Question 5

mathematical treatment of simple interest: principal amount of the loan or investment

Answer 5

P

Question 6

mathematical treatment of simple interest: annual rate

Answer 6

r

Question 7

mathematical treatment of simple interest: time period (term)

Answer 7

t

Question 8

mathematical treatment of simple interest: amount of interest paid or recieved

Answer 8

I

Question 9

mathematical treatment of simple interest: maturity value

Answer 9

F

Question 10

simple interest formulas

Answer 10

I=Prt
P= I/rt
P = F/(1+rt)
F= P+I
F= P(1+rt)
I=F-P

Question 11

the first day of a loan

Answer 11

loan date

Question 12

is the last day of the loan

Answer 12

due date (maturity date)

Question 13

uses 30 days in every month

Answer 13

approximate time

Question 14

uses the exact number of days in every specific month

Answer 14

actual time

Question 15

is compound in 365 days in a year as the time factor denominator

Answer 15

exact interest

Question 16

is a type of interest wherein the number of days is computed based on 360 days in a year

Answer 16

ordinary interest

Question 17

banker’s rule

Answer 17

ordinary interest in actual time

Question 18

the procedure in which interest is periodically calculated and added to the principal.

Answer 18

compound interest

Question 19

the time interval between succeeding interest calculations

Answer 19

conversion period/ compounding period/ interval period

Question 20

is the number of compoundings that take place in a year

Answer 20

compound frequency/ conversion frequency

Question 21

mathematical treatment of compound interest: nominal interest rate

Answer 21

j

Question 22

mathematical treatment of compound interest: no. conversion/year

Answer 22

n

Question 23

mathematical treatment of compound interest: periodic interest rate

Answer 23

i

Question 24

compound interest formulas

Answer 24

F= P(1+i)^n
n=tm
i= j/m
P=F/(1+n)^n

Question 25

periodic interest rate (i) multiplied by the number of periods in a year; does not take compounding into account

Answer 25

nominal interest rate

Question 26

more accurate measure of interest; calculated based on the nominal interest rate and its compounding periods

Answer 26

effective interest rate

Question 27

effective rate formula

Answer 27

r=(1+j/m)^m-1

Question 28

nominal rate formula

Answer 28

j=m(m (sqrt. (1+r)) -1)