16 Questions
What is the lender's role in a financial transaction?
Investing the money or making the funds available
Which term refers to the date on which money is received by the borrower?
Origin or loan date
What does 'Simple Interest' refer to?
Interest that is computed on the principal and then added to it
What does the term 'Compound Interest' mean?
Interest that is computed from the principal and on the accumulated past interests
What is the 'Maturity value' or 'Future value' in a financial transaction?
Amount after t years that the lender receives from the borrower on the maturity date
What is considered as Principal (P) in a financial transaction?
Amount of money borrowed or invested on the origin date
In the context of finance, what is the difference between 'actual number of days' and 'approximate number of days'?
Actual number of days includes leap year, while approximate number of days assumes 30 days in each month.
What is the definition of 'Compound Interest' in the context of finance?
Interest that is computed from the principal and on the accumulated past interests.
In the context of finance, what does 'Rate' (r) refer to?
The annual rate charged by the lender or the rate of increase of the investment.
What is the 'Effective Interest Rate' in finance?
The actual rate of interest that takes effect in the loan/investment.
What is a key requirement for an annuity in finance?
Continuous and equal payments at specified intervals.
In finance, what is considered as the 'Principal or present value' (P)?
The amount of money borrowed or invested on the origin date.
What is 'Maturity/future value or compound amount' (A) in finance?
The amount after t years that the lender receives from the borrower on the maturity date.
What is an important characteristic of annuity payments?
'Continuous,' equal, and periodic payment intervals.
'Payment interval' in an annuity refers to:
'Time between successive payments at equal (fixed) intervals.'
'Present value' of an annuity in finance refers to:
'Sum of present values of all the payments to be made during the entire term of an annuity.'
This quiz covers the definition of terms related to simple interest, including lender, borrower, origin date, repayment date, and time or term. Test your understanding of these fundamental concepts in general mathematics.
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