Introduction to Finance

 1. 
(LO 9.1)
Identify the six principles of fi nance.
 2. 
(LO 9.1) 
Briefl y describe the time value of money.
 3. 
(LO 9.1)
Explain simple interest.
 4. 
(LO 9.2)
Describe the process of compounding and the meaning 
of compound interest.
 5. 
(LO 9.2)
Briefl y describe how infl ation, or purchasing power, 
impacts stated or nominal interest rates.
 6. 
(LO 9.3)
What is discounting? Give an illustration.
 7. 
(LO 9.3)
Briefl y explain how present values and future values are 
related.
 8. 
(LO 9.4)
Describe the process for solving for the interest rate in 
present and future value problems.
 9. 
(LO 9.4)
Describe the process for solving for the time period in 
present and future value problems.
 10. 
(LO 9.4) 
How can the Rule of 72 be used to determine how long 
it will take for an investment to double in value?
 11. 
(LO 9.5)
What is an ordinary annuity? What is an annuity due?
 12. 
(LO 9.6)
Describe how the present value of an annuity can be 
found. 
 13. 
(LO 9.7)
Briefl y describe how to solve for the interest rate or the 
time period in annuity problems.
 14. 
(LO 9.8)
Describe the process for determining the size of a con-
stant periodic payment that is necessary to fully amortize a loan such 
as a home mortgage.
 15. 
(LO 9.9)
Describe compounding or discounting that is done more 
often than annually.
 16. 
(LO 9.9) 
What is usury, and how does it relate to the cost of con-
sumer credit?