# Ch 6: Interest & Purchases: Help and Review

### About This Chapter

## Who's it for?

Anyone who needs help understanding material from business math will benefit from taking this course. You will be able to grasp the subject matter faster, retain critical knowledge longer and earn better grades. You're in the right place if you:

- Have fallen behind in understanding interest and purchases or working with business math.
- Need an efficient way to learn about interest and purchases.
- Learn best with engaging auditory and visual tools.
- Struggle with learning disabilities or learning differences, including autism and ADHD.
- Experience difficulty understanding your teachers.
- Missed class time and need to catch up.
- Can't access extra math learning resources at school.

## How it works:

- Start at the beginning, or identify the topics that you need help with.
- Watch and learn from fun videos, reviewing as needed.
- Refer to the video transcripts to reinforce your learning.
- Test your understanding of each lesson with short quizzes.
- Submit questions to one of our instructors for personalized support if you need extra help.
- Verify you're ready by completing the Interest and Purchases chapter exam.

## Why it works:

**Study Efficiently:**Skip what you know, review what you don't.**Retain What You Learn:**Engaging animations and real-life examples make topics easy to grasp.**Be Ready on Test Day:**Use the Interest and Purchases chapter exam to be prepared.**Get Extra Support:**Ask our subject-matter experts any relevant question. They're here to help!**Study With Flexibility:**Watch videos on any web-ready device.

## Students will review:

In this chapter, you'll learn the answer to questions including:

- What are index numbers?
- What are common credit terms?
- How do installment plans work?
- What's the difference between deferred payment price and cash price?
- How do you calculate markup and markdown?
- What is an effective annual rate and how do you calculate it?
- How do you calculate a percentage increase or decrease?
- What is a promissory note and how does it work?

### 1. Credit Terms: Due Date, Invoice Date & EOM

After watching this video lesson, you will understand some of the key terms that companies use on the invoices that they send to you. Learn how to pay your invoices according to these terms so you aren't late.

### 2. Deferred Payment vs. Cash Price: Calculation & Interest

Watch this video lesson to learn the difference between paying cash up front for an item versus making payments at a later time for an item. Watch and see how you may end up paying more for an item if you pay later.

### 3. Effective Annual Rate: Formula & Calculations

After watching this video lesson, you will understand how the interest rate that financial institutions, such as credit card companies, give you work. Also, learn how this interest rate may be different than the one you actually end up with.

### 4. Index Numbers in Statistics: Uses & Examples

Watch this video lesson to learn what index numbers are. Learn how useful this statistical number is in the real world. You will also see some index numbers that we use and probably hear every day.

### 5. Installment Purchases: Payment & Terms

After watching this video lesson, you will know how installment purchases work. Learn how you can calculate the amount of your fixed installment payment.

### 6. Markup & Markdown: Calculation & Examples

After watching this video lesson, you will become familiar with how stores price their products to make a profit. Learn about how they increase their prices, markup, and how they decrease their prices, markdown.

### 7. Percentage Increase and Decrease: Calculation and Examples

After watching this video lesson, you will be able to calculate the percentage increase and decrease of changes that happen over time. You will also learn what you need in order to make your calculations.

### 8. Promissory Note: Terms & Calculations

Watch this video lesson, and you will learn how some promissory notes, such as mortgages, can be sold and why they are sold. Learn about the terms or conditions that go into such a note and how money is made with these notes.

### 9. How to Find P-Value

When is a number so much bigger or smaller than another that it should raise some eyebrows? Tests of significance help make such determinations. This lesson explains the p-value in significance tests, how to calculate them, and how to evaluate the results.

### 10. How to Calculate Sharpe Ratio: Definition, Formula & Examples

In this lesson, you will learn the definition of a measure for calculating risk-adjusted return called Sharpe Ratio, its formula, examples, and its applications.

### 11. Holding Period Return (HPR): Formula & Examples

In this lesson, we will learn how to calculate holding period returns and how to annualize them. Several formulas will be presented with examples that work through each type of return.

### 12. Negative Interest Rates: Definition & History

Strange as it sounds, a negative interest rate means that you end up having to pay a bank in order to store your funds. Additionally, it means that borrowers get paid. Learn how negative interest rates started in this lesson.

### 13. Holding Period Yield: Formula & Examples

One of the simplest ways to calculate investment performance is by using the holding period yield formula. This lesson will explore the information needed to calculate holding period yield and provide several examples of how to make the calculation.

### 14. Money Market Yield: Definition & Formula

In this lesson, we will define the money market, its purpose, and the groups that participate in the market. We will also review a few examples investors use to calculate the yield.

### 15. Effective Annual Yield: Definition & Formula

In this lesson, you will learn what effective annual yield is, how it can be calculated, and the reason it is so important when it comes to understanding bonds.

### 16. Bond Equivalent Yield: Formula & Examples

The bond equivalent yield is used to determine the annual yield on a discount bond. In this lesson we will discuss its formula, examples, and making decisions from the results of the bond equivalent yield.

### 17. Forward Auction: Definition & Examples

After reading this lesson, you will learn that there are actually two types of forward auctions. There is the one that you are most familiar whose prices increase with each bidder, and another one where the prices drop!

### 18. Negative Convexity: Definition & Examples

In this lesson, you will learn the definition and examples of negative convexity of the bond yield curve. In the process, you will learn many important terms related to bond investment such as a bond's duration and convexity.

### 19. Treasury Yield Curve: Definition & Historical Data

This lesson will introduce you to the Treasury Yield Curve. We will first cover what U. S. Treasury Securities are, then the importance of the yield curve which reflects the rates on various terms of Treasury Securities.

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### Other Chapters

Other chapters within the Business Math: Help and Review course

- Graphing and Evaluating Equations and Functions: Help and Review
- Quadratic Equations and Functions: Help and Review
- Linear Equations and Inequalities: Help and Review
- Number Sense - Business Math: Help and Review
- Depreciation & Salvage Values: Help and Review
- Probability and Statistics for Business: Help and Review
- Math for Financial Analysis
- Business Math Applications
- Project Management Formulas & Calculations
- Categorical Data