Mathematics of Finance

S=P(1+i)^mt

What does m stand for?

• Number of times the interest is compounded annually.

• Number of times the interest is compounded during the month.

• Maintaining the interest.

D=Sdt What is D stand for?

• Bank Discount

• Proceed

• Amount of Loan

Symbol for 'Amount of Loan' in Simple Discount?

• S

• D

• Proceed

What is d stands for?

• Bank discount rate

• Bank discount

• Proceed

• Amount of loan

When is payment made on an ordinary annuity?

• Beginning of the period
• Middle of the period
• First 3 days of the period
• End of the period

What is the main difference between an annuity and a compound interest investment?

• A series of payments is made for annuities.
• Compound interest investments are for a shorter time period.
• The cash value of annuities can be figured using the compound interest table.
• Annuities involve a series of payments of usually differing amounts, whereas compound investments involve regular contributions of equal amounts.

The simple interest formula is I=Prt.  The P represents the principle.  The principle is ___________________.  

• the amount of money borrowed or deposited
• the percent interest for his year
• the amount taxed
• the amount the bank owes you for being a customer at their bank

Bruno was given RM2000 when he turned 3 years old. His parents invested it at a 2% interest rate compounded annually. No deposits or withdrawls were made. Which expression can be used to determine how much money Bruno had in the account when he turned 16?

• 2000(1+0.02)¹³

• 2000(1-0.02)¹³

• 2000(1+0.02)¹⁶

• 2000(1-0.02)¹⁶

The compound interest formula is:

S = P(1 + i)ⁿ

What does the S represent?

• The amount of interest earned.

• The amount of time that has passed.

• The total amount of money after a certain amount of time.

• The amount required to invest.

If you are calculating the simple interest and you are given the time in months. How can you find the time in years?

• divide 12 by the months

• divide the months by 12

• multiply 12 times the months

• change the months to a decimal