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QLDGeneral MathematicsQuick questions
Unit 4: Investing and networking
Quick questions on Loans, investments and annuities (QCE General Mathematics Unit 4)
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is the compounding recurrence?Show answer
Every product in this topic is built from one recurrence: each period the balance is multiplied by a growth factor and then adjusted by a payment. Let be the interest rate per period as a decimal and the balance after periods.
What are compound interest investments?Show answer
With no regular payment () the recurrence becomes pure compound growth. The closed form is
What are reducing-balance loans?Show answer
A loan starts as a debt. Each period interest is charged and a repayment is subtracted, so :
What are annuities?Show answer
An annuity is an account paying out equal regular withdrawals from an invested lump sum. It uses the same recurrence with as the withdrawal. The account is exhausted when the balance hits zero.
What are amortisation tables?Show answer
An amortisation table records, for each payment: the interest charged that period, the principal repaid (payment minus interest), and the new reduced balance.
What is wrong sign on the payment?Show answer
Repayments and withdrawals are subtracted; deposits are added. A sign slip turns a shrinking loan into a growing one.
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