CHS AMDM Final

What is a periodic rate in finance?

• The interest rate applied to a specific period, calculated by dividing the annual interest rate by the number of compounding periods per year.

• The total interest paid over the life of a loan divided by the number of payments.

• The rate at which an investment grows over a year without considering compounding.

• The rate used to calculate the present value of future cash flows.

How do you calculate the probability of drawing two specific colored marbles in succession?

• Add the probabilities of drawing each marble separately.

• Multiply the probability of drawing the first marble by the probability of drawing the second marble, considering the change in total items if drawn without replacement.

• Calculate the total number of marbles and divide by two.

• Draw the first marble, then draw the second marble without considering the first draw.

How do you calculate the total amount in an account after a certain period with daily compounding?

• Use the compound interest formula, adjusting for daily compounding by setting n to 365.

• Multiply the principal amount by the interest rate and the number of days.

• Add the principal amount to the interest earned over the period.

• Use the simple interest formula for daily calculations.

How do you find the probability of independent events occurring?

• The sum of their individual probabilities.

• The product of their individual probabilities.

• The difference between their individual probabilities.

• The average of their individual probabilities.

How do you interpret a probability value?

• A probability value ranges from -1 to 1, where -1 means the event will not occur and 1 means the event will certainly occur.

• A probability value ranges from 0 to 1, where 0 means the event will not occur and 1 means the event will certainly occur.

• A probability value ranges from 0 to 100, where 0 means the event will not occur and 100 means the event will certainly occur.

• A probability value ranges from 0 to 10, where 0 means the event will not occur and 10 means the event will certainly occur.

What is the difference between simple interest and compound interest?

• Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest that has already been added.

• Simple interest is calculated on the total amount including interest, while compound interest is calculated only on the principal amount.

• Simple interest is always higher than compound interest over time.

• Compound interest is calculated only on the principal amount, while simple interest is calculated on the principal plus any interest that has already been added.

What does 'without replacement' mean in probability?

• It means that items are returned to the set after each draw.

• It means that once an item is drawn, it is not returned to the set before the next draw, affecting the total number of items available for the next draw.

• It means that all items are drawn at once without any selection process.

• It means that the probability of drawing an item changes after each draw.

What is the role of probability in decision making?

• Probability is used to predict the weather accurately.

• Probability helps assess risks and make informed decisions based on the likelihood of various outcomes.

• Probability is only relevant in gambling and games of chance.

• Probability has no significant impact on decision making.

What is the significance of compounding frequency in interest calculations?

• It determines the initial principal amount.

• It affects how often interest is calculated and added to the principal, impacting the total amount of interest earned over time.

• It has no effect on the total interest earned.

• It only matters for short-term investments.

What is the formula for calculating the probability of an event?

• Probability = Number of favorable outcomes / Total number of outcomes.

• Probability = Total number of outcomes / Number of favorable outcomes.

• Probability = Number of outcomes / Total number of favorable outcomes.

• Probability = Number of favorable outcomes + Total number of outcomes.