Quiz No.

1 - ELEC-MI
Which of the following statements best describes the purpose of diversification? *0/1

It maximizes the possible returns

It generates cash

It increases the risk of the portfolio

It lowers the overall risk of the portfolio

STATEMENT 1: On the part of the supplier of funds, when interest rates tend to fall, prices of
financial assets (stocks/bonds) also fall. STATEMENT 2: Investment involves sacrificing some
asset today in hopes of a greater pay-off in the future. *1/1

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

FALSE, FALSE

STATEMENT 1: Common stock entitles an owner to receive dividends. STATEMENT 2:

Preferred stock entitles an owner to receive dividends. *0/1

FALSE, TRUE

FALSE, FALSE

TRUE, FALSE

TRUE, TRUE

This is a way of spreading out risks so that a single event would not affect all of one’s
assets. *1/1

Compounding

Allocation

Investment

Diversification
A collection of assets is called a/an *1/1

Porfolio

Grouping

Investment

Diversity

STATEMENT 1: The goal of an investor is to pay less than the real value. STATEMENT 2: The
greater the margin you have, the more it is unlikely for you to lose money when unexpected
negative conditions arise. *1/1

FALSE, FALSE

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

Which of the following is/are true regarding non-systematic risk? *1/1

This risk is diversifiable

The impact of this risk is system wide

Both A and B

Neither A nor B

This ordinarily refers to the risk of diminution n the value of one’s invested funds due to inflation
or foreign exchange depreciation. *1/1

Market Risk

Purchasing power risk

Default risk

Interest rate risk

A risk faced by someone who lends in a currency other than one’s own, because when it is
translated back to his own currency, he is short-changed. *0/1

Interest rate risk

 Market Risk

Purchasing power risk

Liquidity risk

Which of the following is not a good investing principle? *1/1

Embrace portfolio volatility

Implement portfolio risk management strategies

Invest for long term

Always leave a margin of safety

STATEMENT 1: High risk strategy focuses on wealth protection. STATEMENT 2: Low risk
strategy focuses on capital appreciation. *0/1

FALSE, FALSE

FALSE, TRUE

TRUE, TRUE

TRUE, FALSE

STATEMENT 1: Bonds are the safest investment because they do not have risk of capital losses.
STATEMENT 2: Stocks are considered as one of the riskiest type of investment *1/1

TRUE, FALSE

FALSE, TRUE

TRUE, TRUE

FALSE, FALSE

STATEMENT 1: The larger the margin of safety you have the less risk you assume, the greater
your potential capital gains, and the higher your income percentage will be. STATEMENT 2: A
margin of safety is a leeway for mistakes, judgment errors, or unforeseen adverse
conditions. *1/1

TRUE, TRUE

FALSE, TRUE
 FALSE, FALSE

TRUE, FALSE

It is how you divide your assets into different investment classes or groups. *1/1

Allocation

Diversification

Investmentt

Portfolio

STATEMENT 1: The higher the risk one faces, the lower the yield one should expect.
STATEMENT 2: Risk is the probability of incurring a loss. *1/1

TRUE, FALSE

FALSE, FALSE

TRUE, TRUE

FALSE, TRUE

STATEMENT 1: Not all risks can be minimized through diversification. STATEMENT 2:

Systematic risk is inherent to the entire market/ market segment. *1/1

FALSE, FALSE

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

STATEMENT 1: Cash gives the lowest returns of all the investment types. STATEMENT 2:
Investment in property carries no investment risk. *0/1

FALSE, TRUE

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE
Which of the following is/are true regarding risk? *0/1

Risk is the price you pay for a potential reward.

All the risk is in an investment can be avoided.

Both A and B

Neither A nor B

Which of the following is/are true regarding systematic risk? *0/1

It cannot be eliminated through diversification

It is cause by system wide factors.

Both A and B

Neither A nor B

STATEMENT 1: Stocks gives a shareholder a share of ownership in a company. STATEMENT 2:

Preferred stocks are on the first line to receive dividends. *1/1

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

FALSE, FALSE

Quiz No.2 - ELEC-MI

Statement 1: The actual time is equivalent to the sum of the exact number of days of each month.
Statement 2: The approximate time is computed using 30 days for each month in a year. *1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Find the actual number of days from February 24, 2019 to June 14, 2019. *1/1
 108 days

111 days

116 days

110 days

A credit union has issued a 3-year loan of ₱50,000 at a rate of 10%. What amount will be repaid
at the end of the third year? *0/1

50,000

50,500

65,000

15,000

Statement 1: An individual or institution that borrows money for any purpose is called a creditor.
Statement 2: The final amount is the capital or sum of money borrowed or invested. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Accumulate ₱4,200 for 2 years and 3 months at 6.5% simple discount. *1/1

4,919.47

4,938.27

4,814.25

4,827.90

Discount ₱10,000 for 1 year and 3 months at 7% simple discount? *0/1

9,125

9,090

875
 910

Which of the following is/are correct in finding the elements in a simple interest? *0/1

a. The principal is the total amount of money borrowed (or invested), including any interest.

b. The interest rate is the percent of the principal to be paid.

c. Both a and b

d. Neither a nor b

Statement 1: Unless noted otherwise, interest rates are expressed on an annual basis.
Statement 2: The amount of money at the beginning of the time period is known as the present
value. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Find the interest on a loan of ₱5,000 at 18% simple interest and which was paid after 6
months. *1/1

450

5,400

650

4,500

To renovate a portion of her house, Mrs. Galvez made a loan of ₱48,000 from a bank that
charges 16% interest. How much did she pay the bank after 120 days using the ordinary interest
method? (Round off the answer to the nearest whole number) *0/1

2,560

50,560

48,000

55,680
Which of the following is/are correct regarding simple discount? *0/1

a. At simple discount, the interest is computed based on the final amount.

b. Interest is paid at the beginning of a specified period of time.

c. Both a and b

d. Neither a nor b

At 16.2% simple discount, find the proceeds of ₱32,000, which is due at the end of 270
days. *0/1

3,834.74

3,888

28,165.26

28,112

Statement 1: A peso actually received today is worth less than a peso to be received tomorrow.
Statement 2: The time value of money states that the amount of money today is different from
what it will be in the future. *1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Find the exact interest on ₱15,000 if it is invested at 12% for 60 days. *1/1

289.50

295.89

259.89

300.00

How long will ₱3,000 accumulate to ₱3,050 if the discount rate is 4.5%? *1/1

0.20 years
 0.36 years

0.70 years

0.50 years

On the first day of October 2018, Arnold Flores had ₱21,455 in an account that earns 10.5%
interest. How much interest was added to his account at the end of December of same year if he
made no additions or withdrawals during this time? Use the banker’s rule. *0/1

563.19

569.45

575.71

561.65

Quiz No.3- ELEC-MI

Statement 1: Proceeds refer to the net amount received after deduction of any discount or
charges. Statement 2: Maturity date is the date when payment is due. *1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Statement 1: Compound interest is an interest computed every conversion period whose

principal amount excludes the specified interest earned every end of the conversion date.
Statement 2: Compound amount is an accumulated amount composed of the principal and the
compound interest. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE
Statement 1: Compound interest is the difference between the compound amount and the
original principal. Statement 2: Bi-monthly means every 15 days or twice a month. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Statement 1: The payee is the one who writes the note. Statement 2: The term of note refers to
the actual number of days from the discounting date until the maturity date. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Mary and Grace deposited ₱8,000 in a savings account at 5%. If interest is compounded
monthly, what will be the amount of their deposit at the end of 2 years? (Round off your answer
to two decimal places) *0/1

846.58

Statement 1:The term of discount is the actual number of days from the date the note was
written to its maturity date. Statement 2: The discounting date is the exact date the note was
discounted. *1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Find the effective rate which is equivalent to a nominal rate of 8% compounded quarterly. *1/1

7.16%

8.24%

9.25%
 9.05%

Statement 1: The person to whom the payment stipulated in the promissory note is called the
lender or the payee. Statement 2: A promissory note can be sold to a bank or other lending
institution at a specified discount rate. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Find the compound amount earned by the end of 15 years and 5 months if ₱45,000 is invested
at 13.2% compounded semi-monthly. (Round off your answer to two decimal places) *0/1

57452.78

Statement 1: A promissory note is a negotiable instrument. Statement 2: The date of note is the
date indicating when the note will be settled. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Statement 1: A promissory note is a written agreement by the borrower, to settle an amount, to a

lender within the designated time in the future. Statement 2: The face value of a note is equal to
the maturity value less interest. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Accumulate ₱15,000 for 5 years at 6% compounded quarterly. (Round off your answer to two
decimal places) *0/1

5202.83
Find the compound amount on ₱9,700 for 5 years and 3 months at 6% converted semi-annually.
(Round off your answer to two decimal places) *0/1

743.95

Determine the interest if ₱10,500 is invested at 10% compounded quarterly for 3 years. (Round
off your answer to two decimal places) *1/1

3621.33

If money can be invested at 3 ½ % compounded quarterly, find the present value of ₱6,500 due
at the end of 2 years and 3 months. (Round off your answer to two decimal places) *0/1

48.84
Find the rate compounded semi-annually if ₱9,000 accumulates to ₱15,500 in 4 years and 6
months. *1/1

11.55%

11%

12.45%

12%

Discount ₱9,500 for 7 years and 4 months at 5% compounded monthly. (Round off your answer
to two decimal places) *0/1

1182.91

What rate converted monthly is equivalent to an effective rate of 9%? *1/1

7.25%

7.16%

8.24%

8.65%

Quiz No.4- ELEC-MI

Statement 1: Short-term notes receivable shall be measured at face value. Statement 2: The
initial measurement of long-term notes will depend on whether the notes are interest bearing or
non-interest bearing. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

A note of ₱15,600 matures in 150 days with interest at 10 ½ %. Find the maturity value. (Round
off your answer to two decimal places) *2/2

16282.5

Statement 1: Interest bearing note is a note on which interest rate is quoted and interest is paid
on the due date along with the principal amount. Statement 2: Cash flows regarding short-term
notes receivable are not discounted because the effect of discounting is usually immaterial.0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

On April 6, 2019, a 180-day promissory note of ₱25,000 is drawn by Mrs. Castro to the order of
Mrs. L. Capalla. The note bears 25% simple interest. Find the maturity value of the note. *2/2

28125

Statement 1: Interest bearing note is a note where the interest rate is stipulated so that the face
value is equivalent to the maturity value. Statement 2: In a bank discount note, the amount
received by the maker of the note, on the date it was written, is called the face value. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE
A noninterest bearing note is sold to a bank seventy days before maturity? The discount rate is
12%. If the seller receives ₱16,285.80 for the note from the bank, what is the face value of the
note? (Round off your answer to two decimal places) *0/2

15914.46

Statement 1: Interest-bearing long term notes are measured at present value. Statement 2:
Noninterest-bearing long term notes are measured at face value. *1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Statement 1: The term “non-interest bearing” is a misnomer because all notes implicitly contain
interest. Statement 2: In interest-bearing note, the face value is equivalent to the maturity
value. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

If Micah lends Pam ₱55,000 on April 21, 2016 and allows her to sign a noninterest-bearing note
due in 90 days. What amount should Micah collect from Pam at the end of 90 days? *0/2

41,250

68,750

13,750

55,000

Statement 1: Conceptually, notes receivable shall be measured initially at face value. Statement
2: The prevailing market rate of interest is actually the effective interest rate. *1/1

TRUE, TRUE

TRUE, FALSE
 FALSE, TRUE

FALSE, FALSE

Statement 1:If the note is interest bearing, the selling price is assumed to be the present value of
the note. Statement 2: The normal balance of a note receivable is on the credit side. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Statement 1: Note receivable from interest bearing note is also called non-discounted note
receivable. Statement 2: In interest-bearing note, the interest is implied in the face value of the
note. *0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Elsa signs a note for ₱10,000 due at the end of 10 months. If the bank’s discount rate is 7%,
how much cash does she receive? *0/2

10583.33

Statement 1: At maturity date, the note receivable is being debited. Statement 2: In a noninterest
bearing note, the interest is included in the present value of the note.0/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

A note of ₱13,700 dated November 27,2019 will mature in 90 days at ₱14,136.69. What is the
interest rate used for the note? *2/2

13.25%
 13%

12%

12.75%

Statement 1: The principal is the amount appearing on the face of the note. It is also referred as
the face value. Statement 2: The discount rate and the interest rate are different from each
other.1/1

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

FALSE, FALSE

Mr. Ed Mundi needs ₱40,000 now and plans to pay it in 2 years. How much note must he signed
to a bank that charges 9% simple discount? (Round off your answer to two decimal places) *0/2

47200

On June 26, 2017 Pedong Navarro obtains a loan from a bank to be repaid on December 18,
2017. If the bank charges 11 7/8 % simple discount, what must be the face value of a
noninterest-bearing note that will have a proceeds of ₱13,500? (Round off your answer to two
decimal places) *0/2

12613.83

A merchant has a note for ₱14,500 dated March 17,2016. The note is due in 120 days with
interest at 11 1/8%. Find the interest at the end of 120 days. (Round off your answer to two
decimal places) *0/2

15037.71

An entity manufactures and sells machinery. On January 1,2019, the entity sold machinery
costing ₱280,000 for ₱400,000. The buyer signed a noninterest-bearing note for ₱400,000
payable in four equal installments every December 31. The cash sales price of the machinery is
₱350,000. What is the present value of the note? *2/2

120,000

280,000

400,000
 350,000

ELEC MI-Prelim Exam

Which of the following statement is/are correct regarding investing principles? *0/1

I. Investors only purchase securities when the market price is above the intrinsic value.

II. The lower the volatility of a portfolio, the riskier it is for investors.

III. The marginal benefits of adding additional investment decreases as the number of your investments
increases.

I and II

I and III

II and III

All of these

None of these

Correct answer
III. The marginal benefits of adding additional investment decreases as the number of your investments
increases.

Which of the following statement is/are correct regarding risks in investing? 1/1

I. Risk is the price you pay for a potential reward.

II. Systematic risks are both unpredictable and impossible to completely avoid.

III. Interest rate risk is a systematic risk that can affect bonds directly and shares indirectly.

I and II

I and III

II and III

All of these

None of these
Which of the following statement is/are correct regarding actual and approximate time? *1/1

I. Actual time is the exact or actual number of days in any given month.

II. Approximate time is where all the months within a year contain 30 days.

III. In finding the time between dates, usually the first day is included but the last day is excluded.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is/are not correct regarding simple discount? *0/1

I. A discount is a deduction from the final amount or maturity value of a loan or obligation.

II. A simple discount is often called bank discount or interest-in-advance.

III. The amount of money that the lender receives is called proceeds.

I and II

I and III

II and III

All of these

None of these

Correct answer
III. The amount of money that the lender receives is called proceeds.

Which of the following statement is/are not correct? *1/1

I. Compound interest is the interest resulting from the periodic addition of simple interest to the principal.

II. Owners of preferred stocks entitled them to receive dividends but common stocks are not entitled.
 III. Cash investments carry the lowest potential returns of all the investment types.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is/are correct regarding simple interest? *0/1

I. It is an interest in which only the original principal bears interest for the entire term of the loan.

II. In simple interest, the principal and present value is not equal.

III. The capital or sum of money invested is called the principal.

I and II

I and III

II and III

All of these

None of these

Correct answer
I and III

Which of the following statement is/are not correct? *0/1

I. The computation of bank discount is based on the present value.

II. Proceeds is the sum a creditor is willing to pay a note before its maturity date.

III. If the note is non-interest bearing the maturity value is the same as the face value.

I and II

I and III
 II and III

All of these

None of these

Correct answer
I. The computation of bank discount is based on the present value.

Which of the following statement is/are correct? *1/1

I. When interest is not specified in any problem, it is assumed as Ordinary.

II. Accumulation is the process of determining the amount of a given principal due at a specified time.

III. Discounting is the process of determining the future value of any amount due in the future.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is/are correct about ordinary and exact interest? *1/1

I. If the interest is computed with a denominator of 360, the interest is called Exact.

II. If the interest is computed with a denominator of 365, the interest is called Ordinary.

III. Exact interest is greater than ordinary interest.

I and II

I and III

II and III

All of these

None of these
Which of the following statement is/are correct about promissory notes? *0/1

I. When the holder of the promissory note finds himself in need of cash after the maturity date, he may sell
the note to other persons or to a bank, this process is called discounting or selling the promissory note.

II. The maturity value is the amount at the end of the given term, which is the sum of the face value and
interest.

III. It is a written promise signed by the maker or debtor to pay a certain sum of money on demand or at a
fixed and determinable future date, either to the bearer or to the order of a designated person.

I and II

I and III

II and III

All of these

None of these

Correct answer
II and III

Multiple Choice - Problem Solving

6 of 9 points
(Part 2 of 3)

How long will it take for ₱8,000 to earn ₱2,400, if it is invested at 6 ½% simple interest? *1/1

4.36 years

3 years

4.62 years

2.86 years

None of these

Feedback

t= I/Pr
If a principal of ₱2,500 earns interest of ₱185 in 3 years and 3 months, what interest rate is in
effect? 1/1

2.28%

2.24%

3.10%

2.15%

None of these

Feedback

formula: r=I/Pt

If the proceeds of a loan of ₱12,450 will be paid with ₱12,840 at the end of 1 year and 9 months.
What is the simple discount rate? *0/2

1.65%

1.87%

2.25%

2.63%

None of these

Correct answer
None of these

Feedback

answer: 1.74%; formula d=D/Ft extracted from formula for discount which is D=Fdt

Find the ordinary interest on ₱8,800 for 85 days at 11 ¾% simple interest. *1/1

244.14

240.79

250.16
 236.15

None of these

Feedback

I=Prt

What nominal rate compounded monthly, will yield the effective rate 4%? *2/2

4.23%

3.50%

2.90%

3.93%

None of these

Feedback

formula: 1+w=(1+i)^m

A principal earns interest of ₱385 in 2 years and 9 months at a simple interest rate of 9 ½ %.
Find the principal invested. *0/1

1,397.46

1,473.68

1653.55

1250.68

None of these

Correct answer
1,473.68

Feedback

P=I/rt
Find the interest on ₱1,200 at 11 3/8% simple interest for 2 years and 5 months. *1/1

341.25

329.88

335.16

300.05

None of these

Feedback

formula: I=Prt

Problem Solving
2 of 16 points
Solve the following problems and provide your answer.

If the answer is a whole number, enter it as a whole number. But if the answer is in decimal form, round off to two decimal
places.

(Part 3 of 3)

Mr. Sirug wants to provide a ₱200,000 graduation gift for his daughter Sofia. She is now 16
years old, and she would like the fund to be available by the time she is 20. He decides on an
investment that pays 10% compounded quarterly. How large must the deposit be? *0/2

1345499.99

Correct answers

134724.99

134,724.99

Feedback

P=F/(1+i)^n

Discount ₱16,400 at 15 1/5% simple interest from August 9,2019 to December 25,2019. *0/2
865.56

Correct answers

15497.04

15,497.04

Feedback

find first the actual time, then use the formula: P= F/1+rt

Find the compound amount if ₱5,500 is invested at 8% compounded quarterly for 5 years and 6
months. *0/2

8398.34

Correct answers

8502.89

8,502.89

Feedback

formula: F=P(1+i)^n

What amount should be paid on January 15,2017 for a loan of ₱16,000 made on July 7,2016 at
8% simple interest? (Use ordinary interest using actual time) *0/2

1891.56

Correct answers

16682.67

16,682.67

Feedback

F=P(1+rt)
How much loan would Mr. Kamlon ask for, if he needs ₱12,500 cash which will be repaid in two
years and three months with 10 4/5% simple discount. *0/2

30375.5

Correct answers

16512.55

16,512.55

Feedback

formula: F=P/(1-dt)

If money can be invested at 9% compounded quarterly, find the present value of ₱15,600 due at
the end of two years and nine months. *0/2

6045.51

Correct answers

12,213.16

12213.16

Feedback

P=F/(1+i)^n

A note of ₱15,600 matures in 150 days with interest at 10 ½%. Find the maturity value. *2/2

16282.5

Feedback

Mv=Fv(1+r*tn)
Niña paid ₱9,250 on a loan made 6 months before at 12% simple interest. Find the interest
generated. *0/2

555

Correct answer

523.58

ELEC MI-Midterm Quiz#1

After being held for 30-days, a 120-day 12% interest bearing note receivable was discounted at
a bank at 15%. The amount received from the bank is equal to *1/1

Maturity value less discount at 12%

Maturity value less discount at 15%

Face value less discount at 15%

Face value less discount at 12%

Statement 1: Accounts receivables are open accounts arising from the sale of goods and
services in the ordinary course of business and are not supported by promissory notes.
Statement 2: Trade receivables include only accounts receivable but not notes receivable. *1/1

FALSE, FALSE

FALSE, TRUE

TRUE, FALSE

TRUE, TRUE

Statement 1: If no discount rate is given, the interest rate is assumed as the discount rate.
Statement 2: The interest must be for the “full term” of the note in determining the maturity
value. *0/1
 FALSE, TRUE

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE

Correct answer
TRUE, TRUE

Statement 1: The difference between the net proceeds from discounting and the carrying amount
of the note receivable is recognized as gain/loss. Statement 2: If the net proceeds exceed the
carrying amount of note receivable at the date of discounting, there is gain on discounting. *0/1

TRUE, TRUE

FALSE, FALSE

FALSE, TRUE

TRUE, FALSE

Correct answer
TRUE, TRUE

Statement 1:If the discounting of note receivable is with recourse, it means that the sale of the
note receivable is absolute. Statement 2: The interest income is credited for the actual interest
earned on the date of discounting. *1/1

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

TRUE, TRUE

Statement 1: Accounts receivable are claims supported by formal promises to pay usually in the
form of notes. Statement 2: Endorsement is not necessary in discounting notes receivable. *0/1
 TRUE, FALSE

TRUE, TRUE

FALSE, TRUE

FALSE, FALSE

Correct answer
FALSE, FALSE

Statement 1: Discount is equal to maturity value times discount period times discount rate.
Statement 2: The discount period is the remaining term of the note on the date of
discounting. *0/1

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

FALSE, FALSE

Correct answer
TRUE, TRUE

Statement 1: The payee is the one liable and the maker is the one entitled to payment on the
date of maturity. Statement 2: If the problem is silent, endorsement is assumed to be without
recourse. *0/1

TRUE, FALSE

FALSE, FALSE

FALSE, TRUE

TRUE, TRUE

Correct answer
FALSE, FALSE
Statement 1: If the discounting is treated as conditional sale, the note receivable discounted
account is being credited. Statement 2: Net proceeds is equal to maturity value less
discount. *1/1

TRUE, FALSE

FALSE, FALSE

TRUE, TRUE

FALSE, TRUE

Statement 1: Maturity value is equal to principal plus interest. Statement 2: The interest rate
used to compute for the carrying amount of the note at the date of discounting is equal to the
expired portion of the note. *1/1

FALSE, TRUE

TRUE, FALSE

FALSE, FALSE

TRUE, TRUE

Problem Solving
2 of 10 points
Provide what is being asked for.

(Part 2 of 2)

PROBLEM: A note of ₱13,700 dated November 27,2019 will mature in 90 days with interest at
12 ¾%. The note is discounted on January 6, 2020 at a discount rate of 11 ¼%.

For the problem above, find the maturity value. *2/2

14136.69
For the problem above, find the discount. *0/2

278.32

Correct answer

220.89

For the problem above, find the net proceeds. *0/2

13858.37

Correct answers

13915.8

13,915.8

13915.80

13,915.80

For the problem above, find the carrying amount of note as of January 6, 2020. *0/2

13845.56

Correct answers

13894.08

13,894.08

For the problem above, how much is the gain or loss on discounting? *0/2
 Loss, 27.21

Gain, 27.21

Loss, 21.72

Gain, 21.72

None of the choices

Correct answer
Gain, 21.72

ELEC MI-Midterm Quiz#2

PROBLEM NO.1: A note of ₱15,000 dated October 27,2018 will mature in 100 days with interest
at 12.5%. The note is discounted on January 5,2019 at a discount rate of 10 4/5%.

How much interest would the note gain after 100 days? *2/2

520.83

When would the note mature? *1/1

February 27, 2019

October 27, 2018

January 5, 2019

February 4, 2019

The unexpired term of the note would be *0/1

80 days
 20 days

70 days

30 days

Correct answer
30 days

What amount would be deducted by the bank in advance? *2/2

139.69

What amount was received from the note receivable discounting on January 5, 2019? *0/2

153381.14

Correct answers

15,381.14

15381.14

If the discounting transaction is accounted for as conditional sale with recognition of contingent
liability, what amount would be credited as note receivable on January 5, 2019? *0/2

15364.58

Correct answer

Problem Solving
4 of 10 points
Provide what is being asked for. The questions are based on the problem below.

(Part 2 of 2)

PROBLEM NO.2: On April 1, 2019, Aljean Company discounted with recourse a 9-month, 10%
note dated January 1, 2019 with face of ₱6,000,000. The bank discount rate is 12%. The
discounting transaction is accounted for as a conditional sale with recognition of contingent
liability.

What amount was held back by the bank on April 1, 2019? *2/2

387000

What amount was received from the note receivable discounting on April 1, 2019? *2/2

6063000

What was the carrying amount of the note as of March 1, 2019? *0/2

6150000

Correct answers

6,100,000

6100000

What amount should be recognized as loss on note discounting? *0/2

8700
Correct answers

87,000

87000

Which of the following is included in the journal entry to record the transaction? *0/2

Debit loss on discounting ₱37,000

Debit interest income ₱100,000

Debit cash ₱6,063,000

Credit note receivable ₱6,000,000

None of the choices

Correct answer
Debit cash ₱6,063,000

ELEC MI-Midterm Quiz#4

Statement 1: An annuity due is one for which the first payment occurs immediately. Statement 2:
Annuity due is an annuity in which payments are made at the end of each period. *1/1

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

FALSE, FALSE

Statement 1: Generally, problems that involve expenses and cash are future-value problems.
Statement 2: Generally, problems that involve income or revenue are present-value
problems. *0/1
 TRUE, FALSE

FALSE, TRUE

TRUE, TRUE

FALSE, FALSE

Correct answer
FALSE, FALSE

Statement 1: The ordinary annuity has greater future value than that of annuity due. Statement 2:
Since the cash flows occur sooner, the present value of the annuity due exceeds that of the
ordinary annuity. *0/1

FALSE, FALSE

TRUE, FALSE

TRUE, TRUE

FALSE, TRUE

Correct answer
FALSE, TRUE

Statement 1: The present value of an annuity due is the sum of all discounted value of several
payments due at the term, with the first payment to be made at the beginning of a period.
Statement 2: The future value of an annuity due is the sum of the accumulated values of the
payments at the end of the term, with the first payment to be made at the beginning of a
period. *0/1

FALSE, FALSE

TRUE, TRUE

TRUE, FALSE

FALSE, TRUE

Correct answers
TRUE, TRUE
 FALSE, TRUE

Problem Solving
2 of 16 points
Provide what is being asked for.

(Part 2 of 2)

PROBLEM #1: An item was purchased for an ₱18,000 down payment and ₱2,500 at the
beginning of each six months for 3 ½ years. The interest is 5 ½% compounded semi-annually.
Find the following:

Problem #1 Total installment payments *0/2

3408.76

Correct answers

16155.92

16,155.92

Problem #1 Cash equivalent/ cash value *0/2

21408.76

Correct answers

34155.92

34,155.92

PROBLEM #2: If money is worth 16% compounded quarterly, find the present value and the
amount of annuity due of ₱1,500 payable quarterly for 10 years.
For problem#2 Present value of annuity due *0/2

48.58

Correct answers

30876.73

30,876.73

For problem#2 Amount/Future value of an annuity due *0/2

10.12

Correct answers

148239.80

148,239.80

PROBLEM #3: Louie agrees to pay ₱500 at the beginning of each month for 1 ½ years to
discharge his debt, with interest at 30.42% compounded monthly. Find:

For problem#3 The amount of his debt *0/2

34.08

Correct answers

7336.45

7,336.45

For problem#3 Louie’s remaining liability just after he makes his 14th payment *0/2
5.41

Correct answers

1,927.05

1927.05

1879.39

1,879.39

1879.40

1,879.40

PROBLEM #4: Tory wants to have ₱95,000 for his traveling expenses four years from now. How
much must he save at the beginning of each quarter starting now, if he gets 6% compounded
quarterly interest on his savings? *0/2

3268.76

Correct answers

5219.39

5,219.39

PROBLEM #5: Emil invests ₱5,000 at the beginning of each six months. He makes his first
deposit on January 19,2003. How much will be in his account on January 19,2015, if money is
worth 9% compounded semi-annually? *2/2

217826.05

ELEC MI-Midterm Exam

A 90-day 15% interest-bearing note receivable is sold to a bank without recourse after being
held for 60 days. The proceeds are calculated using a 12% interest rate. The amount credited to
note receivable at the date of the discounting transaction would be *1/1

The same as the cash proceeds

Less than the face value of the note

The face value of the note

The maturity value of the note

None of these

A note receivable bearing a reasonable interest rate is sold to a bank with recourse. At the date
of the discounting, the note receivable discounted account should be *0/1

Decreased by the net proceeds from discounting

Increased by the net proceeds from discounting

Increased by the face amount of the note

Decreased by the face amount of the note

None of these

Correct answer
Increased by the face amount of the note

If a note receivable is discounted with recourse *1/1

A contingent liability does not exist

Note receivable discounted should be credited

Liability for note discounted should be credited

Note receivable must be credited

None of these
Which of the following best describes an annuity due? *1/1

A perpetuity

Unequal payments

Payment made at the beginning of the year

Payment made at the end of the year

None of these

You want to obtain a loan, suppose you have a choice of two equally risky annuities, each
paying ₱1,000 per year for 20 years. One is an annuity due while the other is an ordinary annuity.
Which annuity is better? *0/1

The ordinary annuity

The annuity due

Either one because the annuities have the same future value

Without information about the appropriate interest rate, it cannot be determined which annuity is better

None of these

Correct answer
The ordinary annuity

Which of the following statement is/are correct? *0/1

I. An annuity is a series of unequal payments at regular intervals.

II. Periodic payment is the amount paid during each installment payment period.

III. The time from the beginning of the first payment interval to the end of the last payment interval is called
the term of annuity.

I and II

I and III
 II and III

All of these

None of these

Correct answer
II and III

Which of the following statement is/are correct? *1/1

I. The “m” is the number of conversion period per year.

II. The “n” is the total number of conversion periods for the whole term.

III. Problems that involve expenses and cash equivalent are finding the future value problems.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is/are not correct? *0/1

I. There is a change in the payee after the note is discounted at the bank or any financial institutions.

II. There is a change in the maker after the note is discounted at the bank or any financial institutions.

III. In an endorsement without recourse, the endorser avoids future liability if the maker refuses to pay the
endorsee on the date of maturity.

I and II

I and III

II and III

All of these
 None of these

Correct answer
II. There is a change in the maker after the note is discounted at the bank or any financial institutions.

Problem Solving
10 of 14 points
Provide what is being asked for.

(Part 2 of 3)

What is the rate compounded monthly of an ordinary annuity of ₱195 payable at the end of each
month for 3 years if its present value is ₱4,500? *2/2

22.50%

31.50%

42.50%

12.50%

None of these

Find the present value and the amount of an ordinary annuity of ₱800 payable monthly for 15
years if money is worth 16.62% compounded monthly.

a. Present value of an annuity due *2/2

52904.68

b. Amount/future value of an annuity due *2/2

629159.92
A debtor agrees to pay ₱5,200 at the end of every 3 months for 7 ¾ years, for a loan that bears
interest at 20.52% compounded quarterly. Find

a. The amount borrowed *0/2

338.56

Correct answers

79868.44

79,868.44

b. The remaining liability just after the 20th payment *0/2

381.63

Correct answers

42,899.96

42899.96

On August 31, 2016, Stable Company discounted with recourse a customer’s note at the bank at
discount rate of 15%. The note was received from the customer on August 1, 2016, is for 90
days, has a face value of ₱5,000,000, and carries an interest rate of 12%. What was the carrying
amount of the note at the time of discounting?

a. Amount received from the note receivable discounting *2/2

5021250
b. Gain/Loss on discounting *2/2

Gain-₱28,750

Loss-₱28,750

Gain-₱20,570

Loss-₱20,570

None of these

Problem Solving
4 of 8 points
Solve the following problems and provide your answer.

(Part 3 of 3)

How much must be deposited every month end in a fund in order to have ₱200,000 at the end of
10 years, if money is worth 18% compounded monthly? *2/2

603.70

Mr. King has already accumulated ₱2,000,000 in his retirement plan. His goal is to build it to
₱6,000,000 with equal contribution at the beginning of every six months for the next eight years.
If his retirement plan earns 10% compounded semi-annually, what must be the size of each
further contributions? *0/2

175752.21

Correct answers

65790.13

65,790.13
The annual premium on a life insurance policy is ₱88,000 payable in advance. What would be
the monthly premium, if the interest rate is based on 9% compounded monthly? *0/2

264

Correct answers

7638.44

7,638.44

What sum should be invested at the beginning of each quarter at 18% compounded quarterly in
order to have ₱50,000 in a fund 6 years from now? *2/2

1147.70

ELEC MI-FINALS Quiz#1

Statement 1: Amortization is the gradual extinguishment of any amount over a period of time.
Statement 2: In amortization of a debt, the total principal repaid is equal to the original
loan/debt. *1/1

FALSE, FALSE

TRUE, TRUE

FALSE, TRUE

TRUE, FALSE

Statement 1: In amortizing a debt, the interest paid increases after each payment. Statement 2:
In amortizing a debt, the payment towards reduction of the obligation decreases
correspondingly. *1/1

FALSE, TRUE

FALSE, FALSE
 TRUE, FALSE

TRUE, TRUE

Statement 1: Sinking fund is a savings fund productively invested in anticipation for future
expenses. Statement 2: A sinking fund is an interest-earning account into which periodic
payments are made for the purpose of accumulating a specific amount of money by a certain
date. *1/1

FALSE, TRUE

TRUE, TRUE

FALSE, FALSE

TRUE, FALSE

Statement 1: In an amortization schedule, the interest at each period is computed on the unpaid
balance at that period using the annual rate. Statement 2: In an amortization schedule, the
periodic payment at each period contains the interest paid and the principal repayment at that
period. *1/1

FALSE, TRUE

TRUE, FALSE

TRUE, TRUE

FALSE, FALSE

Problem Solving
14 of 16 points
Provide what is being asked for.

(Part 2 of 2)

PROBLEM #1: Three years from now, Mr. Si needs ₱30,000 to liquidate a certain debt, at 6%
converted semi-annually.
Problem #1 How much must he deposit at the end of every 6 months to provide for the payment
of the debt? *2/2

4637.93

Problem #1 How much is the interest expense on the 4th deposit? *0/2

430.06

Correct answer

Problem #1 How much is the increase in fund on the 3rd deposit? *2/2

4920.38

Problem #1 How much is in the fund after the 5th deposit? *2/2

24623.40

PROBLEM #2: A ₱20,000 loan at 18% compounded quarterly is to be amortized every three
months for two years. Find:

For problem#2 The quarterly payment *2/2

3032.19
For problem#2 The remaining liabilities just after the 2nd payment *2/2

15639.67

For problem#2 The outstanding balance after 1 year *2/2

10878.09

For problem#2 How much of the 6th payment goes to the principal? *2/2

2657.10

ELEC MI-FINALS Quiz#2

Which of the following statement is/are incorrect? *0/1

I. Transaction costs directly related to the acquisition of trading bond investments are capitalized.

II. Transaction costs directly related to the acquisition of trading bond investments are expensed
immediately.

III. Transaction costs directly related to the acquisition of trading bond investments are added to the fair
value of the asset.

I and II

I and III

II and III

All of these

None of these
Correct answer
I and III

Which of the following statement is/are correct regarding trading bond investments? *0/1

I. Trading bond investments are held for collection.

II. Trading bond investments are not held for collection.

III. Trading bond investments are current investments.

I and II

I and III

II and III

All of these

None of these

Correct answer
II and III

Which of the following statement is/are correct? *0/1

I. The interest income for the year would be lower if the bond was purchased at par.

II. The interest income for the year would be lower if the bond was purchased at a discount.

III. The interest income for the year would be lower if the bond was purchased at a premium.

I and II

I and III

II and III

All of these

None of these

Correct answer
III. The interest income for the year would be lower if the bond was purchased at a premium.
A financial asset shall be measured at amortized cost if *1/1

I. The business model is to hold the financial asset in order to collect contractual cash flows on specified
dates.

II. The contractual cash flows are solely payments of principal and interest on the principal amount
outstanding.

I or II

I and II

None of these

Which of the following statement is/are incorrect regarding transaction cost? *0/1

I. If the financial asset is held for trading, transaction costs are expensed outright.

II. If the financial asset is measured at fair value through profit/loss, transaction costs are deducted from
fair value.

III. If the financial asset is measured at amortized cost, transaction costs are expensed outright.

I and II

I and III

II and III

All of these

None of these

Correct answer
II and III

Which of the following statement is/are incorrect? *0/1

I. The interest income for the year would be higher if the bond was purchased at par.

II. The interest income for the year would be higher if the bond was purchased at a discount.
 III. The interest income for the year would be higher if the bond was purchased at a premium.

I and II

I and III

II and III

All of these

None of these

Correct answer
I and III

Which of the following statement is/are correct regarding measurement of bond

investments? *1/1

I. Bond investments held for trading are measured initially at fair value less transaction cost.

II. Bond investments measured at amortized cost are measured initially at fair value plus transaction cost.

III. Bond investments measured at fair value through profit or loss are measured initially at fair value plus
transaction cost.

I and II

I and III

II and III

All of these

None of these

Accrued interest on bonds purchased between interest dates *1/1

I. Is ignored by both the seller and the buyer.

II. Increases the amount a buyer must pay.

III. Decreases the amount a buyer must pay.

I and II

I and III
 II and III

All of these

None of these

4 of 7 points

Read each question/statement and select the best answer.

(Part 2 of 2)

Which of the following statement is not true? Statement 1: Financial asset at fair value through
profit or loss are measured at fair value less transaction cost. Statement 2: Bond investments
can be measured subsequently at amortized cost. *1/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Which of the following statement is true? Statement 1: A bond is a debt security because the
bondholder is a creditor and the issuer is a debtor. Statement 2: An investor derives regular
income from bonds in the form of interest. *0/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Correct answer
Both statements
Which of the following statement is false? Statement 1: Financial asset at fair value through
other comprehensive income is achieved both by collecting cash flows and by selling the
financial asset. Statement 2: Investment in bonds classified as financial asset at amortized cost
are considered as current investments. *0/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Correct answer
Statement 2 only

Which of the following statement is not true? Statement 1: Open-end mortgage bonds are
commonly accepted by bondholders. Statement 2: It is not possible to use the same property as
collateral in several bond issuances. *1/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Which of the following statement is true? Statement 1: Only firms with a high bond rating are
allowed to issue debenture bonds. Statement 2: Debenture bonds are example of secured
bonds. *1/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Which of the following statement is not false? Statement 1: Junk bonds are issued by firms who
are in a weak financial condition. Statement 2: Junk bonds can be issued by firms who undergo
restructuring. *1/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Which of the following statement is not true? Statement 1: Financial assets held for trading are
considered as noncurrent investment. Statement 2: Term bonds are example of callable
bonds. *0/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Correct answer
Both statements

ELEC MI-FINALS Quiz#3

Which of the following statement is not false? *1/1

I. Bond premium is a gain on the part of the bondholder.

II. Bond discount is a loss on the part of the bondholder.

III. Bond premium/discount should be recognized outright.

I and II

I and III

II and III
 All of these

None of these

The interest method of amortizing premium provides for *1/1

Increasing amortization and increasing interest income

Increasing amortization and decreasing interest income

Decreasing amortization and decreasing interest income

Decreasing amortization and increasing interest income

None of these

Which of the following statement is not false? *1/1

I. Bonds usually sell at a discount when investors are willing to invest in bonds at the stated interest rate.

II. Bonds usually sell at a discount when investors are willing to invest in bonds at rate lower than the stated
interest rate.

III. Bonds usually sell at a discount when investors are willing to invest in bonds at rate higher than the
stated interest rate.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is false? *1/1

I. Bonds usually sell at a premium when market rate is greater than stated rate.

II. Bonds usually sell at a premium when stated rate is greater than the market rate.
 III. The effective interest rate on bond is lower than the stated rate when bond sells below face amount.

I and II

I and III

II and III

All of these

None of these

Amortized cost is the initial recognition amount *1/1

I. Minus repayments

II. Plus discount amortization or minus premium amortization

III. Minus reduction for impairment

I and II

I and III

II and III

All of these are correct about amortized cost

All of these are incorrect about amortized cost

Which of the following statement is not false? Statement 1: The reason for amortization of bond
premium or discount is to bring the carrying amount of the investment to fair value on the date of
maturity. Statement 2: When bonds are redeemed on the date of maturity, the entry includes
debit to investment in bonds at face value. *0/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Correct answer
 None of the statement

Which of the following statement is true? *1/1

I. The effective rate is the actual interest earned by the bondholder.

II. The stated rate is the actual interest earned by the bondholder.

III. The coupon rate is the actual interest earned by the bondholder.

I and II

I and III

II and III

All of these

None of these

Which of the following statement is not false? Statement 1: On the date of maturity, the
bondholder will collect an amount more than the face value if he originally purchased the bond at
premium Statement 2: On the date of maturity, the bondholder will collect an amount less than
the face value if he originally purchased the bond at discount. *0/1

Statement 1 only

Statement 2 only

Both statements

None of the statement

Correct answer
None of the statement

Which of the following statement is not true? *0/1

I. Bond premium is a deduction from the interest income.

II. Bond discount is an addition to the interest income.

 III. Interest received is computed by multiplying the face amount by the nominal rate.

I and II

I and III

II and III

All of these

None of these

Correct answer
None of these

Which of the following statement is not true about the interest method? *1/1

I. The interest method applied to bond is different from that applied to other debt investment.

II. Amortization of discount increases from period to period.

III. The interest method applies the effective interest rate to the beginning carrying amount

I and II

I and III

II and III

All of these

None of these

Problem Solving
0 of 10 points
Read the problem carefully and provide what is being asked for.

(Part 2 of 2)

On July 1, 2016, Irma Company paid ₱1,198,000 of 10%, 20-year bonds with a face amount of
₱1,000,000. Interest is paid on June 30 and December 31. The bonds were purchased to yield
8%. The effective interest method is used to recognize interest income from this long term
investment.
How much is the total interest income for the year 2018? *0/2

286203

Correct answer

95227

How much is the interest received on December 31, 2018? *0/2

500000

Correct answer

50000

How much is the unamortized premium as of December 31, 2018? *0/2

2531

Correct answer

186734

What was the carrying amount of the investment in bonds on December 31, 2016? *0/2

1193757

Correct answer

1195920
How much is the premium being amortized on December 31, 2017? *0/2

2340

Correct answer

2250