General Mathematics Distribution phase – The time after the release of
Interest
Simple interest is a fixed percentage of the total amount
invested paid to an investor each year.
Principal- Amount invested
Time- number of years the principal is invested
Rate- fixed percentage or rate
Exact interest (Ie) is simple interest computed based on
the ratio1 year : 365 days.
Ordinary interest (Io), on the other hand, is simple
interest computed based on the ratio 1 year : 360 days.
Maturity Value- final amount of an investment (or
debt) after interest is added
Compound Interest- interest that is added to the old
principal to make a new principal on which interest is
again calculated for the next period.
Compound Amount- The total amount at the end of the
last period.
Future Value- the amount that matured from the
principal.
Present Value- Principal
Annuities
Annuity- an amount to be paid, usually in equal
amounts at equal time intervals; usually applied in
payments for large purchases.
Common Applications:
• Houses
• Condominiums
• Cars
• Insurance plans
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.
 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
annuity
 If each phase consists of a single payment, then
there is no annuity. If each phase consists of
more than one payment, then an annuity exists.
Logic
Proposition- declarative statement that can be evaluated
either true or false but cannot be both.
Simple proposition- consists of one (1) declarative
sentence or statement.
Compound proposition- consists of two (2) or more
simple propositions joined together by logical operators.
Logical operators are words that either:
• combine two (2) or more simple propositions to form a
new compound proposition; or
• modify the meaning of a proposition.
A. Conjunction:
 Uses the word “and” to join together two (2)
propositions
 Symbol: ∧
 TRUE: When ALL its components are
TRUE
 FALSE: When AT LEAST ONE (1) of its
components is FALSE
B. Disjunction:
 Uses the word “or” to join together two (2)
propositions
 Symbol: ∨
 TRUE: When AT LEAST ONE (1) of its
components is TRUE
 FALSE: When ALL of its components are
FALSE
C. Implication:
 Uses “if-then” to construct a new
proposition from two (2) propositions
 In an implication, the first proposition is
called the premise while the second is called
the conclusion.
 Symbol: →
 TRUE: When the premise is FALSE, or
when the premise and the conclusion are
BOTH TRUE
 FALSE: When the premise is TRUE but the
conclusion is FALSE
D. Biconditional:
 Uses “if and only if” or “is equivalent to” to
construct a new proposition from two (2)
propositions
 A biconditional statement simply states that
two propositions are equivalent, that is, if
the first one is true, then the second must
 also true, and if the second is true, then the
first must also be true.
 Symbol: ↔
 TRUE: When BOTH propositions have the
same truth value, that is, when BOTH are
TRUE, or when BOTH are FALSE
 FALSE: When the propositions have
opposite truth value, that is, one is TRUE
but the other is FALSE
E. Negation:
 Precedes a proposition with the word “not”
 Symbol: ∼
 TRUE: When the proposition is FALSE
 FALSE: When the proposition is TRUE
Tautology is a proposition that is always true under any
circumstance.
Contradiction is always false under any circumstance.
Rules of inference are rules that provide the way of
drawing a correct conclusion from a given premise.
With these rules are syllogisms that draw correct
conclusion from two (2) or more premises.
Syllogism- the conclusion follow the given premises
 If Q is the consequence of P, and P happens,
then Q also happens.
(This rule of inference is known as Modus Ponens.)
 If Q is the consequence of P, and Q did not
happen, then P does not happen.
(This rule of inference is known as Modus Tollens.)
Fallacy is a kind of reasoning in which the conclusion
does not necessarily or logically follow from the
premise.
 In a class of 50 students, 35 receive daily
allowance worth above P100. Hence, all 50
students receive allowance above P100.
(The error of attributing to the whole what is observed to
some is known as the fallacy of composition.)
 If you do anything you want, then you will find
joy in life.
(The error of failing to give logical connection between
the premise and the conclusion, but rather the arguments
appeal to one’s emotion is known as the fallacy of
relevance.)
Basic Concepts of Stocks and Bonds
Stock is a share in the ownership of a company,
representing a claim on the company's assets and
earnings.
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.
A stockholder's return on his/her investment is called
Dividend.
Stock Certificate is a proof of ownership, which
represents a stock.
Stocks are bought and sold in a Stock Exchange, also
called The Stock Market.
Philippine Stock Exchange (PSE) regulates the stock
market in the country.
Par Value- The original price set by a company for
stocks when they are first issued
Bond is bought to grant credit to a company.
written contract between the issuer of the bond
(borrower) and the investor (lender, or the buyer of the
bond)
1. the face value or denomination of the bond on the
front of the bond;
2. the redemption date or maturity date on which the
loan will be repaid;
3. the bond rate or coupon rate which the bond pays on
its face value at regular time intervals
until the maturity date; and
4. the redemption value which is the amount promised
to be paid on the redemption date.
Kinds of Stocks and Their Dividends
• 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.
Retained earnings is the remaining amount of profit of
the company after stock dividends are subtracted.
Market Indices for Stocks
• Stock Yields (percent yield) – Ratio of annual
dividend to price per share
• Current Yield – Ratio of annual dividend to current
price
• 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; The PE ratio
measures how expensive a stock is.
• Rate of Return on a Stock Investment – Ratio of
total gains to total cost
Market Indices for Bonds
• Bond Yields (percent yield) – Ratio of annual
dividend to price per share
• Current Yield – Ratio of annual dividend to current
price
• Approximate Yield to Maturity
Theory of Efficient Markets
- holds that stocks are already accurately priced
and they reflect all available information about
companies. Hence, there is no way to predict
future stock prices
Sub-Theories:
1. Weak form assumes that current stock prices
fully reflect all historical information, including
past returns.
2. Semi-strong form assumes that stock prices
fully reflect all historical information and all
current publicly available information.
3. Strong-form states that prices reflect not just
historical and current publicly available
information, but insider information, too.