BFIN

LAS 9

The risk-return tradeoff is the principle that potential return rises with an increase in risk.True
Risk is the income received on an investment plus any change in market price. False
A return is the variability of returns from those that are expected. False
Time value of money deals with future value and present value. True

The time value of money is the idea that money available at the present time has the same worth in the future due to
its potential earning capacity. False

SQ10
This is the current worth of a future sum of money or stream of cash flows given a specified rate of return. Present
value

Which of the following is not needed in solving for annuity. Principal

Which of the following is not needed in solving for simple interest. Number of times the interest is compounded
per year

Which of the following is not needed in solving for compound interest. Periodic payment at the end of every
period

On the part of the borrower, this is the interest paid on the original amount, or principal, borrowed. Simple interest
This is a series of equal payments made at the end of consecutive periods over a fixed length of time. Annuity
This is the value of a current asset at a specified date in the future based on an assumed rate of growth over time.
Future value
Which is not a component of return? Principal
This is a fee paid for using another party's money. Interest
This is the interest paid (earned) on any previous interest, as well as on the principal borrowed (lent). Compound
interest
LAS10
Glen is depositing Php 5,000 every year for about 4 years. The simple interest rate is Answer 1
10%. What is the total value of the money at the end of the 4th year? A

Shella made a bank deposit worth Php 20,000. With 5% annual interest, how much is the total Answer 2
interest after 3 years? S

Hannah made a bank loan worth Php 200,000 with 5% interest compounded semi-annually (2
Answer 3
times in a year). If she will pay the whole amount at the end of the term, how much will be the
A
value of the loan after 2 years?
John made a bank deposit worth Php 10,000. With 2% interest compounded annually, how Answer 4
much is the total interest after 2 years? S

What is the present value of a grant worth Php 5,000 payable at the end of every month for 4 Answer 5
years, if money is worth 2% compounded monthly (12 times a year)? C
SQ10
What is the present value of annuity of Php 1,500 payable at the end of every year for 2 years, if money is worth
12%? Php 3,265.50
Shella made a bank deposit worth Php 21,550. With 5% annual interest, how much is the total interest after 3
years? Php 3,232.50
Ben needs to have Php 20,000 after two years. Assuming that he will only deposit once, with a 5% interest
compounded annually, how much will you deposit today? Php 35,434.43

Glen is depositing Php 5,500 at the end of every period for about 4 years. It has 10% interest rate compounded
annually. What is the total value of the money at the end of the 4th year? Php 25,525.50

Jenny made a bank deposit worth Php 20,550 which will earn 5% annual interest. What is the value of this money
after 3 years? Php 23,632.50
Hannah made a bank loan worth Php 200,550 with 5% interest compounded semi-annually (2 times in a year). If
she is to pay at the end of the period only, how much will be the value of the loan after 2 years? Php 221,369.68
John made a bank deposit worth Php 30,555. With 5% interest compounded semi-annually(2 times a year), how
much will be the value of your money after 3 years? Php 35,434.43
John made a bank deposit worth Php 10,500. With 2% interest compounded annually, how much is the total interest
after 2 years? Php 424.20
Ken wants to have Php 100,000 after 5 years. If the bank pays 5% interest on deposits, how much must he deposit
today in order to have that amount in the future? Php 78,352.62

What is the amount of annuity of Php 1,555 payable at the end of every year for 2 years if interest rate is 10%? Php
3,265.50
LAS11
Generally, the higher the risk the higher the return can be. True
Investing also makes your money work for you and is considered as a valuable financial resource. True
Bonds are means of protection from financial loss. False

Common stockholders are usually paid first and common stockholders are paid if there is remaining distributable
income. False
Properties bought is not considered as investments. . False
SQ11
This is a term usually used to describe properties such as lands and buildings. Real eastate
These term describes the people who receive allocated profits in form of dividends. Stockholders
These are investment securities that enable investors to pool their money together into one professionally managed
investment. Mutual funds
This is a mutual fund term commonly used to describe the combined holdings in one form. Portfolio
These are securities that signifies ownership in a corporation and represents a claim on part of the corporation's
assets and earnings. Stocks
It is a contract in which an individual or entity receives financial protection or reimbursement against losses from the
insurer or the insurance company. Insurance
These are also known as a fixed-income security. These are debt instruments created for the purpose of raising
capital. Bonds
The value of equipement decreases as time passes by because it is being used. With this statement we can say
that the equipment ________ in value. Depreciate
This is an asset or item that is acquired with the expectation that it will generate interest, income or appreciate its
value in the future. Investment
Payments on insurances are called insurance _________.Premiums
LAS12
Ponzi scheme is a type of pyramid scheme, this is where money from new investors is used to provide a return to
previous investors. True
Real estate schemes are sold as short-term loans to buyers, construction loans to companies, or even as shares in
a building that will earn income and pay it out to investors. Scam artists offer high, guaranteed rates of return to
investors seeking steady income from a tangible asset like real estate. True
Boiler rooms cold call potential investors and pressure them to buy shares. Boiler room operators often set up in a
different jurisdiction or country than the people they target in order to avoid detection by securities regulators and
enforcement agencies. True
Forex scams offer investors the opportunity to invest in foreign exchange, but in the end, the money is lost to those
running the scheme. True

Setting up a High-Yield Investment Program scheme is relatively cheap. Operators buy a domain name, design a
webpage, and publish it on the Internet. Once it's live on the Internet, the promoters are in business. Their next step
is to attract investors from all over the world. True
SQ12
This is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and
misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Offshore investing
scheme

This is a fraudulent investment scheme from illegitimate or non-existent organizations outside your country.
Offshore investing scheme

This type of scheme is extremely difficult for your local law enforcement agencies to investigate because the
individuals involved are foreign criminals. Offshore investing scheme
This is a type of pyramid scheme, this is where money from new investors is used to provide a return to previous
investors. Boiler room scheme
Scammers mislead investors by suggesting that big financially sound institutions participate in their programs, when
in fact such connections do not exist. Prime bank
A person earns by recruiting people who would pay a registration fee without getting any goods to in exchange of
their payments. The recruited person also earns in the same manner. Pyramid scam
This scheme can survive simply by persuading most existing participants to reinvest their money, with a relatively
small number of new participants Ponzi scheme

This scheme cold call potential investors and pressure them to buy shares. Boiler room operators often set up in a
different jurisdiction or country than the people they target in order to avoid detection by securities regulators and
enforcement agencies. Boiler room scheme
This is a scheme that attempts to boost the price of owned stock through false recommendations, misleading or
greatly exaggerated statements in order to sell the cheaply purchased stock at a higher price. Pump and dump
This offer investors the opportunity to invest in foreign exchange, but in the end, the money is lost to those running
the scheme. Forex scams
SQ13
Answer 1
Within 2 years, Jenny-a senior high school student will buy the Malacañang Palace.
N
Answer 2
Within 3 years, Anna plans to buy a lot worth Php 1,000,000 by loaning in PgIBIG.
S
Ken plans to buy a cell phone worth Php 2,000. He plans to buy it after two month by saving Answer 3
a part of his daily allowance. S

Answer 4
Within 2 years, Jenny-a senior high school student will buy the Malacañang Palace.
N
After 200 years, Jenny plans to build a house worth Php 1,000,000 by loaning saving a part Answer 5
of her salary. S

SQ13
Cherry paid the electricity and water bills. This statement best describes. Spending
Kiela went to the sarisari store and she bought food on account. This is to be paid when she gets her salary net
week. Borrowing
Garry gave Php100 for the BantayBata fund. Donating
This defines all financial decisions and activities of an individual or household, including budgeting, insurance,
mortgage planning, savings and retirement planning. Personal finance
Mr. Pan is working as a corporate accountant, he earns Php50,000 in a month. This statement best describes.
Earning
Mr. Chen bought a land. Investing
John contributes every month to the SSS for his retirement benefits. Saving

Anna bought food and drinks. Spending

Ms Kelly had an emergency situation, she made a cash advance from her workplace worth Php10,000. This
statement best describes Borrowing

John earns Php 2,000 in a week. He always see to it that he deposits Php500 every week in his cooperative
personal account. This amount is reserved for future economic activities.This statement best describes Saving
LAS14

It is good to plan ahead on how to allocate your income for savings and expenses. True
Don't expect that you will be earning interest if you did not deposit an amount in your bank account. True
It is good to have negative credit record.False
Savings is only possible if income is lower than expenses. False

Don't take time to think about your financial goals, along with a realistic plan for achieving them. It's just a waste of
time. False

SQ14
Jen decided to deposit her money in a cooperative savings acccount because it yield higher interest than bank
savings account. Which statement best depicts the situation? Compare interest rates

Which statement is correct? It is important know exactly what your goals are so you can create a plan
designed to achieve those objectives.
Jenny engages in time deposits in the bank. Which statement best depicts the situation? Start saving at young
age
Mr. Ken disburses an extra amount for his SSS and Pag-IBIG contributions. Which statement best depicts the
situation? Pay yourself first
Which is not a principle of personal finance? Start saving an old age
John, a government employee, plans retire at the age on 55. Which statement best depicts the situation? Map your
financial future

Which is not a principle of personal finance? Stay assured

Mr. John determines his monthly salary, overtime pays, taxes, SSS, Pag-IBIG and PhilHealth contributions. Which
statement best depicts the situation? Know your take home pay
Which statement is correct? Insurances can help you recover in case of losses
Which is not a principle of personal finance? Sell insurance to avoid being wiped out by a financial loss, such
as an illness or accident.