Professional Documents
Culture Documents
Interest
Which of these refers to the amount of an investment after some specific time: Maturity value
What is the fixed percentage of the total amount invested by a depositor: Simple Interest
Simple interest is a fixed percentage of the total amount invested paid to an investor each year.
Exact interest (𝐼e) is simple interest computed based on the ratio: 1 year: 365 days
Ordinary interest (𝐼𝑜) is simple interest computed based on the ratio: 1 year: 360 days
The final amount of an investment (or debt) after interest is added is called maturity value (MV)
The total amount at the end of the last period is called the compound amount, denoted by 𝐴.
The interest that is added to the old principal to make a new principal on which interest is again
calculated for the next period is called the compound interest, denoted by 𝐼c.
The future value (FV) is the amount that matured from the principal, that is, the present value (PV).
Annuity
Payment interval - The time between successive payments of an annuity.
Term of an annuity - The number of periods from the first payment interval to the last payment Interval.
Simple annuity – Classification of annuity wherein payment intervals and interest conversion periods
are the same.
General annuity – Classification of annuity wherein payment intervals and interest conversion periods
are unequal.
Simple and general annuities are further classified into three (3) classifications.
• Ordinary annuity (annuity-immediate) – Periodic payments are made at the end of the
payment intervals.
• Annuity due – Periodic payments are made at the beginning of payment intervals.
• Deferred annuity – Periodic payment is due at some later date.
Accumulation phase – The time money is put into the annuity until it is released.
Payments.
The future value of an annuity due (FVdue) is the sum of the accumulated values of the
An annuity whose term does not begin until the expiration of specified time is called a deferred
Annuity. To say that an annuity is deferred for a certain time means that the term of the annuity starts
Some owners of it earn voting rights to some important company decisions: Stocks
Stockholder is a person who holds a company's stock, and this means that person is one of the many
owners or shareholders of the company.
Stocks are bought and sold in a stock exchange, also called as stock market.
The Philippine Stock Exchange (PSE) regulates the stock market in the country.
The original price set by a company for stocks when they are first issued is called par value.
BOND
• The face value or denomination of the bond on the front of the bond;
• The redemption date or maturity date on which the loan will be repaid;
• The bond rate or coupon rate which the bond pays on its face value at regular time
intervals, until the maturity date; and
• The redemption value which is the amount promised to be paid on the redemption
date.
• Common stock gives the owner the right to share in the profits and to vote on company
policy. • Preferred stock pays the owner a fixed percentage of the stock's par value each year.
Dividends for preferred stocks must be paid before any dividend can be distributed to owners of
common stock. A preferred stock can be cumulative (cumulative preferred stock), that is, a
company has the option not to distribute it for a period of time, and the dividends accumulate
until they are finally distributed by the company.
Retained earnings is the remaining amount of profit of the company after stock dividends are
subtracted.
Market indices are indicators of the value of a certain stock used to quantify and compare relative
values of stocks and bonds.
Stock Yields (percent yield) – Ratio of annual dividend to price per share
• Earnings per Share (EPS) – Ratio of net income to number of outstanding shares
• Price-Earnings Ratio (PE ratio) – Ratio of price per share to annual earnings per share
• Bond Yields (percent yield) – Ratio of annual dividend to price per share.