10 Questions
Which one of these defines mark-up correctly?
The value added to the price of an item to cover operating expenses and profit
What is the definition of markdown?
The decrease in price from the original sale price of an item
What does principal refer to?
The amount of money borrowed or invested
What is the definition of bank discount?
The charge based on the final amount rather than on the principal or present value
What is the definition of present value?
The current value of amount which is due at some future date
Which one of these defines simple interest correctly?
Interest earned when a loan or investment is repaid in a lump sum.
What is the definition of rate?
The percent of the principal paid as interest per time period.
What is the definition of time?
The number of days, months or years that the money is borrowed or invested.
What is the definition of present value?
The current value of amount due at some future date.
What is the definition of discounting?
The process of determining the present value of any amount in the future.
Study Notes
Definitions of Key Financial Terms
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Mark-up: The amount added to the cost price of goods to cover overhead and profit, typically expressed as a percentage.
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Markdown: A reduction in the selling price of a product, often used to stimulate sales of slow-moving inventory.
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Principal: The initial sum of money borrowed or invested, upon which interest is calculated.
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Bank Discount: A deduction from the face value of a promissory note or bill of exchange, typically calculated at a fixed rate over a specified period.
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Present Value: The current worth of a future sum of money or a stream of cash flows, discounted at a specified interest rate.
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Simple Interest: Interest calculated on the principal amount only, without compounding. It is typically expressed as a percentage of the principal over time.
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Rate: The percentage at which interest is paid or calculated by lenders or earners on investments over a specific period.
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Time: The period over which interest is calculated or the duration until the maturity of an investment or loan.
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Discounting: The process of determining the present value of a payment or stream of payments that will be received in the future, factoring in a discount rate.
Test your knowledge on mark-up, markdown, interest, simple interest, and principal with this quiz. Challenge yourself with questions related to calculating mark-up and markdown, understanding the concept of interest, and identifying the principal amount in different scenarios. Sharpen your understanding of these financial concepts and see how well you grasp their application in real-life situations.
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