Ever wondered why banks charge interest on loans or how your investments grow over time? If you’re preparing for banking exams like JAIIB/CAIIB, or just want to understand financial mathematics better, this session is a must-watch!
In this power-packed session, we break down the concept of interest – Simple Interest vs Compound Interest, formulas, and real-life applications. We also dive into Annuities, their types, future & present value calculations, and practical financial strategies.
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- Banking exam aspirants (JAIIB/CAIIB/AFM students)
- Financial enthusiasts wanting to improve their money management skills
- Investment beginners aiming to understand interest calculations
👉 Stay till the end and drop your doubts in the comments – let’s ace financial mathematics together!
Watch Full Video:-
📌 Key Concepts Covered in This Video
🔹 Understanding Interest
Interest is essentially the cost of borrowing money or the return earned on investments. Banks, lenders, and financial institutions charge interest as compensation for the risk they undertake by lending money.
🔹 Types of Interest
1️⃣ Simple Interest (SI)
Formula: SI = (P × R × T) / 100
Example: Car Loan of ₹1,50,000 at 10% for 2 years
2️⃣ Compound Interest (CI)
Formula: A = P (1 + R/N)^(N*T)
Example: FD investment of ₹1,00,000 at 6% (semi-annual compounding)
🔹 Rule of 72
Formula: 72 ÷ Interest Rate = Years to double
Example: At 6% interest, money doubles in 12 years
🔹 Fixed vs Floating Interest Rates
Fixed Rate: Constant over the loan period (e.g., Home Loan @ 10%)
Floating Rate: Changes with market fluctuations (e.g., MIBOR + 2%)
🔹 Annuities Explained
Two Types:
- Ordinary Annuity – Payments made at end of period
- Annuity Due – Payments made at beginning of period
🔹 Future & Present Value of Annuities
1️⃣ Future Value (FV)
Formula: FV = C × [(1 + i)^n – 1] / i
Example: RD deposit of ₹16,000 yearly @ 10% for 3 years
2️⃣ Present Value (PV)
Formula: PV = C × [1 – (1 + r)^-n] / r
Example: Receiving ₹20,000 every 6 months for 5 years
🔹 Loan Repayment Methods
1️⃣ EMI Calculation
Formula: EMI = P × r × (1 + r)^n / [(1 + r)^n – 1]
Example: ₹1,00,000 Loan @ 10% for 2 years (24 months)
2️⃣ Bullet Payment Method
Entire loan paid at the end (e.g., Fixed Deposit-backed Loans)
Advance Financial Management | Chapter 20 | Module C | JAIIB Exam [FREE EPDF]
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📌 Final Thoughts & Takeaways
- Simple Interest is linear, while Compound Interest grows exponentially
- Annuities ensure fixed payments, but the structure affects their value
- Understanding EMI helps in smart loan management
- Rule of 72 simplifies investment planning
💡 Comment below: What was your biggest takeaway from this session? Have any doubts? Drop them below, and let’s discuss!
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