Basics of Financial Mathematics — Flashcards
CBSE · Class 11 · Applied Mathematics
25 flashcards for Basics of Financial Mathematics (CBSE Class 11 Applied Mathematics) to test yourself on key terms and facts.
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What is Interest? Define it in simple terms.
Answer
Interest is a fee charged on the money that is borrowed. When you borrow money from someone or use somebody else's money, you have to pay a service charge to them. This amount is paid back to the lend…
What is the formula for calculating Simple Interest?
Answer
Simple Interest = P × i × n Where: P = Principal Amount i = Interest Rate n = Number of periods Under simple interest, interest is charged only on the principal amount, not on accumulated interest.
Calculate the simple interest on ₹5,000 at 8% per annum for 3 years.
Answer
Given: P = ₹5,000, i = 8%, n = 3 years Simple Interest = P × i × n = 5,000 × 8% × 3 = 5,000 × 0.08 × 3 = ₹1,200 Total Amount = Principal + Interest = ₹5,000 + ₹1,200 = ₹6,200…
What is the formula for Compound Amount?
Answer
Compound Amount Formula: A = P(1 + i)ⁿ Where: A = Compound Amount P = Principal Amount i = Interest Rate n = Number of Periods Compound Interest = Compound Amount - Principal Amount…
What is the key difference between Simple Interest and Compound Interest?
Answer
Simple Interest: Interest is charged only on the principal amount throughout the period. Compound Interest: Interest is charged on the principal plus any accumulated interest. The interest earned in …
Calculate compound interest on ₹10,000 at 10% per annum for 2 years.
Answer
Given: P = ₹10,000, i = 10%, n = 2 years Compound Amount = P(1 + i)ⁿ = 10,000 × (1 + 0.10)² = 10,000 × (1.10)² = 10,000 × 1.21 = ₹12,100 Compound Interest = ₹12,100 - ₹10,000 = ₹2,100…
What is Effective Rate of Interest?
Answer
The effective rate of interest is the real return on a savings account or investment when the effects of compounding over time are considered. It reveals the actual percentage rate owed on a loan or e…
What is Present Value? Give the formula.
Answer
Present Value describes how much a future sum of money is worth today, accounting for the time value of money. Formula: PV = CF/(1+r)ⁿ Where: CF = Cash Flow in Future Period r = Discount rate or requ…
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Sources & Official References
- NCERT Official — ncert.nic.in
- CBSE Academic — cbseacademic.nic.in
- CBSE Official — cbse.gov.in
- National Education Policy 2020 — education.gov.in
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