Interest Rates
What is the term for the percentage charged on a loan or earned on an investment over a specific time?
Interest Rate
What is the term for a series of equal payments made at regular intervals?
Annuity
What is the term for the total amount borrowed or invested?
Principal
What is the term for spreading investments across different financial instruments to reduce risk?
Diversification
What is the formula for simple interest?
I = P x r x t
I = P x r
Calculate the simple interest earned on PHP1,000 at 5% per year for 3 years.
PHP150
In an ordinary annuity, when do payments occur: at the beginning or the end of the period?
the end of the period
If you borrow PHP10,000 at an interest rate of 8% for 1 year, what is the total repayment amount?
PHP10,800
If a stock is purchased for PHP50 and sold for PHP75, what is the return on investment (ROI) as a percentage?
50%
What does P represent in the formula for compound interest?
Principal
If an investment of PHP500 grows to PHP620 in 2 years, what is the annual simple interest rate?
12%
Calculate the future value of an ordinary annuity with annual payments of PHP1,000 for 5 years at an interest rate of 4%
PHP5,416.32
What does APR stand for in the context of loans?
Annual Percentage Rate
What is the formula for calculating ROI?
ROI = Cost of Investment / Gain from Investment - Cost of Investment × 100%
What is the formula for the present value of a future sum?
PV = FV / (1+r)t
What is the formula for compound interest?
A=P(1+r/m)mt
What is the difference between an ordinary annuity and an annuity due?
Ordinary annuity: Payments occur at the end of each period.
Annuity due: Payments occur at the beginning of each period.
Calculate the monthly payment on a loan of PHP20,000 for 5 years at an annual interest rate of 6%.
PHP386.66
What does the Rule of 72 estimate?
The time it takes for an investment to double at a given annual interest rate
This term refers to the reduction of a debt through regular payments over time.
Amortization
If PHP1,000 is invested at 6% annual interest compounded monthly for 5 years, what is the final amount? (Round to nearest peso.)
PHP1,348
If the future value of an ordinary annuity is PHP15,000, with annual payments of PHP2,000 and an interest rate of 5%, how many years is the annuity?
6 years
What is the term for a schedule showing how each payment on a loan is applied to interest and principal over time?
Amortization schedule
Using the Rule of 72, how many years will it take for an investment to double at an annual interest rate of 6%?
12 years
A rate that adjusts for inflation, showing the real growth in purchasing power, is called what?
Real Interest Rate