Financial Mathematics UPDATED Actual Exam Questions and CORRECT Answers
6 views 0 purchase
Course
Financial Mathematics
Institution
Financial Mathematics
Financial Mathematics UPDATED Actual
Exam Questions and CORRECT Answers
simple interest - CORRECT ANSWER- if the interest charged is base merely on the
principal but is paid at the end of the term
focal date - CORRECT ANSWER- the point on the timeline when several pieces of
money are valued...
Financial Mathematics UPDATED Actual
Exam Questions and CORRECT Answers
simple interest - CORRECT ANSWER✔✔- if the interest charged is base merely on the
principal but is paid at the end of the term
focal date - CORRECT ANSWER✔✔- the point on the timeline when several pieces of
money are valued in order to compare or add them (t=0)
time value of money - CORRECT ANSWER✔✔- the principle that, because of interest, the
value of a given piece of money changes as its location in the timeline changes, increasing
when moved to the future and decreasing when moved to the past
interest - CORRECT ANSWER✔✔- cost or charge for the use of borrowed money
principal - CORRECT ANSWER✔✔- amount of money invested or borrowed
interest rate - CORRECT ANSWER✔✔- percent of the principal that is the basis for the
interest
term - CORRECT ANSWER✔✔- length of the loan in time units corresponding to the rate
promissory note - CORRECT ANSWER✔✔- document on which one party (the payer)
writes his of her promise to pay another party (the payee)the principal and interest for a loan
due at some date in the future
maturity date - CORRECT ANSWER✔✔- the date that a promissory note or other maturing
security must be repaid
maturity value - CORRECT ANSWER✔✔- the amount of money the borrower will pay
back (principal + interest)
, I = - CORRECT ANSWER✔✔- Pit
S = - CORRECT ANSWER✔✔- P(1 + it)
P = - CORRECT ANSWER✔✔- S/ (1 + it)
exact time - CORRECT ANSWER✔✔- everyday of the term except the first day
(subtracting serial numbers)
approximate time - CORRECT ANSWER✔✔- each month is assumed to be 30 days
ordinary interest - CORRECT ANSWER✔✔- the length of a year is assumed to be 360 days
exact interest - CORRECT ANSWER✔✔- the length of a year is taken as 365 days
Banker's Rule - CORRECT ANSWER✔✔- exact time and ordinary interest; find serial
numbers and subtract to find total number of days then divide by 360 to find time
golden rule of finance - CORRECT ANSWER✔✔- monies cannot be added of compared
unless they are valued at the same point in time
average due date - CORRECT ANSWER✔✔- the date at which a single payment equal to
the sum of several obligations will discharge those obligations; not a function of the interest
rate unless it is zero
buying out loans - CORRECT ANSWER✔✔- find maturity value of loan; find the current/
present value of this amount using maturity value at the future value
net present value - CORRECT ANSWER✔✔- 1. Establish the investment
2. Convert expected returns to present value
3. Add PV of expected returns to the negative investment
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.49. You're not tied to anything after your purchase.