Interest calculated only on the initial principal amount
Interest calculated on both the initial principal and the accumulated interest
Interest calculated at a fixed rate annually
Interest calculated only once at the end of the term
#2
What does ROI stand for in finance?
Return on Investment
Rate of Interest
Risk of Inflation
Revenue of Income
#3
What is the difference between simple interest and compound interest?
Simple interest is calculated on the initial principal amount, while compound interest is calculated on both the principal amount and the accumulated interest.
Simple interest is calculated at a fixed rate annually, while compound interest varies annually.
Simple interest is calculated only once at the end of the term, while compound interest is calculated periodically.
Simple interest and compound interest are the same.
#4
What is the time value of money (TVM)?
The concept that a dollar today is worth more than a dollar in the future
The concept that a dollar today is worth less than a dollar in the future
The concept that money has a constant value over time
The concept that money depreciates over time
#5
What is the formula for calculating simple interest?
A = P(1 + rt)
A = P(1 - rt)
A = Prt
A = P / (1 + rt)
#6
What is the future value of an investment if $1000 is invested at an annual interest rate of 5% compounded annually for 5 years?
$1276.28
$1250
$1500
$1100
#7
What is the formula to calculate the annual percentage rate (APR)?
APR = (Interest / Principal) * 100
APR = (Interest / Principal) * 365
APR = (Interest / Principal) * 100 * n
APR = (Interest / Principal) * 100 / n
#8
What is the formula for the future value of an annuity?
FV = P * r * t
FV = P * (1 + r)^t
FV = P * r * (1 + r)^t
FV = P / (1 + r)^t
#9
What is the rule of 72 used for in finance?
To calculate the present value of an investment
To estimate the number of years for an investment to double at a given interest rate
To calculate the future value of an annuity
To calculate the net present value of a project
#10
What is the present value of $5000 to be received after 3 years at an annual discount rate of 8%?
$4133.02
$6000
$4800
$4500
#11
What is the formula to calculate the net present value (NPV) of an investment?