Final Exam - Mathematics of investment - Part I

Which of the following statement best describe the principal amount?

• The amount paid or earned for the use of money.

• The amount of time in years the money is borrowed.

• The amount of money invested or borrowed.

• The amount that the lenders receives from the borrower.

John decided to invest his P50,000 for 3.5 years to a lending firm. How much will he get if it will earn an annual interest rate of 6.5%?

• P 61,375.00

• P 11,375.00

• P 71,375.00

• P 21,375.00

Which of the following illustrates the simple interest formula?

• P=P x r x t

• FV=P(1+rt)

• MV=F+I

• SI=P x r x t

The correct formula to calculate the interest portion of a fixed rate loan payment is ________.

• FV = P + I

• A = P(1+r/n )^nt

• I = P x r x t

• None of the above

A sequence of periodic payments paid or received at equal time interval.

• Bonds

• Stocks

• Loans

• Annuity

An Annuity in which the payments are made at the end of each period.

• Simple Annuity

• General Annuity

• Ordinary Annuity

• Annuity Due

An annuity whose periodic payments are made at beginning of each payment interval.

• Simple Annuity

• General Annuity

• Ordinary Annuity

• Annuity Due

Which of the following statement is TRUE about bonds?

• Higher risk but with possibility of higher returns.

• Prices vary every day.

• A form of equity financing by allowing investors to be part of the company

• Can be appropriate for retirees or for those who need the money soon.

This refers to the time when the insured or his beneficiary is entitled to receive the benefits provided in the contract.

• Maturity Value

• Maturity Date.

• Contract Date

• Payment Period

Which of the following will be more advantageous to an investor or creditor and borrower now a days?

• Investing in a cooperatives tax exempt

• Investing in a bank with higher interest than cooperatives but not tax exempt

• Borrow from 5/6 since you will get money without any requirements

• Deposit in your piggy bank.