Financial Literacy and Practical Math Quiz

Simple interest calculation: P * r * t = $100 * 0.05 * 1 = $5. After one year, $100 + $5 = $105.

ROI stands for Return on Investment, a measure of profitability, calculated as (Net Profit / Total Revenue) * 100.

APR stands for Annual Percentage Rate, representing the cost of borrowing on an annual basis.

Diversification is the practice of spreading investments across different assets to reduce risk.

Amortization is the process of spreading out loan payments over a period, often used for loans with fixed repayment schedules.

Blue Chip Stocks are shares of large, stable companies with a history of reliability and financial strength.

Compound interest formula: P * (1 + r/n)^(nt) where P is principal, r is interest rate, n is number of times interest is compounded per year, and t is time in years.

Profit is calculated as Revenue - Expenses = $500,000 - $350,000 = $150,000.

Simple interest formula: P * r * t where P is principal, r is interest rate, and t is time in years.

Net worth is calculated as Assets - Liabilities, representing the owner's equity in a business.

The Rule of 72 estimates the number of years it takes for an investment to double by dividing 72 by the annual interest rate.

Current ratio formula: Current Assets / Current Liabilities, a measure of a company's short-term liquidity.

Debt-to-equity ratio formula: Total Debt / Total Equity, indicating the proportion of debt used to finance a company's assets.

Liquidity refers to the ease with which an asset can be converted to cash.

EPS formula: (Net Income - Dividends) / Average Outstanding Shares, a measure of a company's profitability per share.

Market capitalization is the total value of a company's outstanding shares, calculated as share price multiplied by the number of shares.

P/E ratio formula: Price per share / Earnings per share, a valuation metric indicating the relative value of a company's stock.

NPV formula: Cash Inflows - Cash Outflows, determining the present value of an investment's future cash flows.

Beta measures the volatility of a stock relative to the overall market, helping assess investment risk.

Future value calculation using compound interest formula: FV = P * (1 + r/n)^(nt) = $1000 * (1 + 0.08/1)^(1*5) = $1484.33.

Present value calculation formula: PV = FV / (1 + r)^n where PV is present value, FV is future value, r is interest rate, and n is time in years.

ROI formula: (Net Profit / Total Revenue) * 100, measuring the profitability of an investment.

WACC formula: (Cost of Equity + Cost of Debt) / Total Capital, representing the average cost of financing a company's assets.

Future value of annuity formula: FV = PMT / r * [((1 + r)^n - 1)], where PMT is periodic payment, r is interest rate, and n is number of periods.

DCF formula: Cash Flow / (1 + r)^n, determining the present value of a company's future cash flows.