2Q GM Terms PDF

2Q GM TERMS o Simple interest is calculated by multiplying the interest rate by the principal amount and the time. o Principal – amount of money borrowed or invested on the origin date. o Rate – percentage charged by the lender, or rate increase of the investment. o I...

2Q GM TERMS o Simple interest is calculated by multiplying the interest rate by the principal amount and the time. o Principal – amount of money borrowed or invested on the origin date. o Rate – percentage charged by the lender, or rate increase of the investment. o Interest – amount paid or earned for the use of money. o Maturity Value or Future Value – is the sum of the principal and the interest that accumulates over the agreed term. o Time or Term – in the form of years, days, or months which the money is borrowed or invested, length of time between the origin and maturity dates. o Ordinary Time/Banker’s Rule (Approximate Time) – assumes that each of the 12 months in a year has 30 days for a total of 360 days o Exact Time (Actual Time) – exact number of inclusive days of transaction 365 days, thus: o t = (number of days)/360 or t = (number of days)/365. Unless otherwise specified, 360 days is used. o Compound interest – interest is computed on the principal and on the accumulated past interest. o ANNUITY – a sequence of payments made at equal (fixed) intervals or periods of time. o PAYMENT INTERVAL – the length of time between successive payments. o TERM OF AN ANNUITY – the total time between the first payment interval and last payment interval. o REGULAR OR PERIODIC PAYMENT (R) – the amount of each payment. o AMOUNT OF AN ANNUITY/ FUTURE VALUE (F) – sum of the Future Values (compound amounts) of all the payments to be made during the entire term of the annuity. o PRESENT VALUE OF AN ANNUITY (P) – sum of the Present Values of all the payments (lump sum) to be made during the entire term of the Annuity. o CASH FLOW – The net amount of cash and cash equivalents being transferred in and out of a company. o DEFERRED ANNUITY – annuity that does not begin until a given time interval has passed. It is a kind of annuity which payments (or deposits) starts in more than one period from the present. Likewise, the first payment interval does not coincide with the first interest period and it is put off to some later date. o PERIOD OF DEFERRAL – time between the purchase of an annuity and the start of the payments for the deferred annuity o Stocks - share in the ownership of a company o Stockholder- someone who has shares in a company. o Dividend- the amount of stockholders’ shares of the company’s earning or profit. o Bonds- are loans provided to an organization like the government. o Bondholder- a holder of bonds issued by a government or corporation. o Par Value or Face Value – is the principal borrowed as shown in the bond. o Proposition – is a declarative sentence that is either true or false; it must be one or the other, or it cannot be both. o Compound proposition - is a proposition formed from simpler proposition using logical connectors or some combination of logical connectors. o Conditional statements - are those statements where a hypothesis is followed by a conclusion. o Tautology – is a compound statement which is true for every value of individual statements. A statement which is true and cannot be false. o Fallacy- the opposite of tautology is contradiction or fallacy. A compound statement which is false and cannot be true. It is the use of invalid or otherwise faulty reasoning. o Contingency- a compound proposition which has both some true and some false values for every value of its propositional variables. IDENTIFY IN A PROBLEM o Payment Interval o Conversion Period SOLVING o Simple Interest o Finding the Time in Simple Interest o Finding the Principal in Compound Interest o General Annuity o Rate per Conversion Period o Conversion Period/Frequency o Deferred Annuity o Dividend Per Share o Part of Company Owned o Propositional Logic Table/Truth Table