Questions from Business Mathematics

Q: Under what circumstance does the value calculated for n equal the number

Under what circumstance does the value calculated for n equal the number of years in the term of the loan or investment?

Q: Which investment scenario requires more time: “$1 growing to $

Which investment scenario requires more time: “$1 growing to $2” or “$3 growing to $5”? Both investments earn the same rate of return. Justify your choice.

Q: What is meant by the effective rate of interest?

What is meant by the effective rate of interest?

Q: Is the effective rate of interest ever numerically smaller than the nominal

Is the effective rate of interest ever numerically smaller than the nominal interest rate? Explain.

Q: Is the effective rate of interest ever equal to the nominal interest

Is the effective rate of interest ever equal to the nominal interest rate? Explain.

Q: A semiannually compounded nominal rate and a monthly compounded nominal rate have

A semiannually compounded nominal rate and a monthly compounded nominal rate have the same effective rate. Which has the larger nominal rate? Explain.

Q: Solve the equations. 2 1 − b 1.45

Solve the equations. 2 1 − b 1.45 = 5.5 b − 9

Q: What distinguishes an ordinary simple annuity from an ordinary general annuity?

What distinguishes an ordinary simple annuity from an ordinary general annuity?

Q: What is meant by the “term” of an annuity?

What is meant by the “term” of an annuity?

Q: If you pay automobile insurance premiums by monthly pre-authorized chequing

If you pay automobile insurance premiums by monthly pre-authorized chequing, do the payments form an ordinary annuity?