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Mathematical Modeling: Financial Mathematics and Economics

Description: Mathematical Modeling: Financial Mathematics and Economics Quiz
Number of Questions: 15
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What is the formula for the present value of a single sum?

  1. PV = FV / (1 + r)^n

  2. PV = FV * (1 + r)^n

  3. PV = FV / (1 - r)^n

  4. PV = FV * (1 - r)^n


Correct Option: A
Explanation:

The present value of a single sum is calculated by dividing the future value by the factor (1 + r)^n, where r is the interest rate and n is the number of years.

What is the formula for the future value of a single sum?

  1. FV = PV * (1 + r)^n

  2. FV = PV / (1 + r)^n

  3. FV = PV * (1 - r)^n

  4. FV = PV / (1 - r)^n


Correct Option: A
Explanation:

The future value of a single sum is calculated by multiplying the present value by the factor (1 + r)^n, where r is the interest rate and n is the number of years.

What is the formula for the present value of an annuity?

  1. PV = PMT * ((1 - (1 + r)^-n) / r)

  2. PV = PMT * ((1 + (1 + r)^-n) / r)

  3. PV = PMT * ((1 - (1 - r)^-n) / r)

  4. PV = PMT * ((1 + (1 - r)^-n) / r)


Correct Option: A
Explanation:

The present value of an annuity is calculated by multiplying the payment amount by the factor ((1 - (1 + r)^-n) / r), where r is the interest rate, n is the number of years, and PMT is the payment amount.

What is the formula for the future value of an annuity?

  1. FV = PMT * (((1 + r)^n - 1) / r)

  2. FV = PMT * (((1 - r)^n - 1) / r)

  3. FV = PMT * (((1 + r)^-n - 1) / r)

  4. FV = PMT * (((1 - r)^-n - 1) / r)


Correct Option: A
Explanation:

The future value of an annuity is calculated by multiplying the payment amount by the factor (((1 + r)^n - 1) / r), where r is the interest rate, n is the number of years, and PMT is the payment amount.

What is the formula for the internal rate of return (IRR) of an investment?

  1. IRR = (FV - PV) / PV

  2. IRR = (FV + PV) / PV

  3. IRR = (FV - PV) / FV

  4. IRR = (FV + PV) / FV


Correct Option: A
Explanation:

The internal rate of return (IRR) of an investment is calculated by dividing the difference between the future value and the present value by the present value.

What is the formula for the net present value (NPV) of an investment?

  1. NPV = FV - PV

  2. NPV = FV + PV

  3. NPV = PV - FV

  4. NPV = PV + FV


Correct Option: A
Explanation:

The net present value (NPV) of an investment is calculated by subtracting the present value from the future value.

What is the formula for the payback period of an investment?

  1. Payback Period = Initial Investment / Annual Cash Flow

  2. Payback Period = Annual Cash Flow / Initial Investment

  3. Payback Period = Initial Investment * Annual Cash Flow

  4. Payback Period = Annual Cash Flow * Initial Investment


Correct Option: A
Explanation:

The payback period of an investment is calculated by dividing the initial investment by the annual cash flow.

What is the formula for the profit margin of a company?

  1. Profit Margin = Net Income / Revenue

  2. Profit Margin = Net Income / Cost of Goods Sold

  3. Profit Margin = Revenue / Net Income

  4. Profit Margin = Cost of Goods Sold / Net Income


Correct Option: A
Explanation:

The profit margin of a company is calculated by dividing the net income by the revenue.

What is the formula for the return on equity (ROE) of a company?

  1. ROE = Net Income / Shareholders' Equity

  2. ROE = Shareholders' Equity / Net Income

  3. ROE = Net Income * Shareholders' Equity

  4. ROE = Shareholders' Equity * Net Income


Correct Option: A
Explanation:

The return on equity (ROE) of a company is calculated by dividing the net income by the shareholders' equity.

What is the formula for the debt-to-equity ratio of a company?

  1. Debt-to-Equity Ratio = Total Debt / Shareholders' Equity

  2. Debt-to-Equity Ratio = Shareholders' Equity / Total Debt

  3. Debt-to-Equity Ratio = Total Debt * Shareholders' Equity

  4. Debt-to-Equity Ratio = Shareholders' Equity * Total Debt


Correct Option: A
Explanation:

The debt-to-equity ratio of a company is calculated by dividing the total debt by the shareholders' equity.

What is the formula for the current ratio of a company?

  1. Current Ratio = Current Assets / Current Liabilities

  2. Current Ratio = Current Liabilities / Current Assets

  3. Current Ratio = Current Assets * Current Liabilities

  4. Current Ratio = Current Liabilities * Current Assets


Correct Option: A
Explanation:

The current ratio of a company is calculated by dividing the current assets by the current liabilities.

What is the formula for the quick ratio of a company?

  1. Quick Ratio = (Current Assets - Inventory) / Current Liabilities

  2. Quick Ratio = (Current Assets + Inventory) / Current Liabilities

  3. Quick Ratio = (Current Assets - Inventory) * Current Liabilities

  4. Quick Ratio = (Current Assets + Inventory) * Current Liabilities


Correct Option: A
Explanation:

The quick ratio of a company is calculated by dividing the current assets minus the inventory by the current liabilities.

What is the formula for the inventory turnover ratio of a company?

  1. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

  2. Inventory Turnover Ratio = Average Inventory / Cost of Goods Sold

  3. Inventory Turnover Ratio = Cost of Goods Sold * Average Inventory

  4. Inventory Turnover Ratio = Average Inventory * Cost of Goods Sold


Correct Option: A
Explanation:

The inventory turnover ratio of a company is calculated by dividing the cost of goods sold by the average inventory.

What is the formula for the days sales outstanding (DSO) of a company?

  1. DSO = (Average Accounts Receivable / Revenue) * 365

  2. DSO = (Revenue / Average Accounts Receivable) * 365

  3. DSO = (Average Accounts Receivable - Revenue) * 365

  4. DSO = (Revenue - Average Accounts Receivable) * 365


Correct Option: A
Explanation:

The days sales outstanding (DSO) of a company is calculated by multiplying the average accounts receivable by 365 and dividing by the revenue.

What is the formula for the working capital of a company?

  1. Working Capital = Current Assets - Current Liabilities

  2. Working Capital = Current Liabilities - Current Assets

  3. Working Capital = Current Assets + Current Liabilities

  4. Working Capital = Current Liabilities + Current Assets


Correct Option: A
Explanation:

The working capital of a company is calculated by subtracting the current liabilities from the current assets.

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