The Complete Excel Guide: Beginners to Advanced - Financial Functions and Terminology

What is the primary use of the PMT function in Excel?

• To determine the monthly payments on a loan

• To calculate the interest rate of a loan

• To calculate the future value of an investment

• To find the total number of payments for a loan

What does the term 'amortization' refer to in finance?

• The process of calculating interest rates

• The schedule of loan repayments

• The calculation of future value

• The determination of present value

Which argument in the PMT function represents the total number of payments?

• Rate

• Type

• NPER

• PV

How does changing the 'type' argument from 1 to 0 affect the payment amount?

• It decreases the payment amount

• It changes the interest rate

• It increases the payment amount

• It has no effect on the payment amount

If you want to calculate monthly payments, how should the interest rate be entered in the PMT function?

• As a daily rate

• As a monthly rate

• As a quarterly rate

• As an annual rate

What happens to the monthly payment if the loan term is extended from 5 years to 10 years?

• The monthly payment increases

• The interest rate changes

• The monthly payment decreases

• The monthly payment remains the same

Why must the future value be set as a negative number if you want to reduce the loan to a specific amount?

• Because it changes the loan term

• Because it represents money received

• Because it affects the interest rate

• Because it represents money owed