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Understanding Canadian Treasury Bills and Promissory Notes Study Guide

This guide explains the fundamentals of payment terms in business transactions, including the cash discount rate, discount period, and credit period. It details common dating methods such as ordinary dating, end-of-month (E.O.M.) dating, and receipt-of-goods (R.O.G.) dating. The guide also covers how to handle partial payments and differentiates between trade discounts and cash discounts, providing practical examples and a summary table of dating methods.

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Business Markup, Discounts, and Profitability Analysis

Trade Discounts, Markups, and Markdown

This content covers solving problems involving trade discounts, markdowns, markup based on cost or selling price, and cash discounts within the supply chain.

  • trade discounts
  • markdowns
  • single rates of discount
  • discount series
  • markup
  • cost
  • selling price
  • cash discount
  • supply chain
  • list price
  • manufacturer’s suggested retail price (MSRP)
  • profit
  • expenses

Calculating Markdowns and Discount Series

Calculating sale price, net price, and single equivalent rate of discount for markdowns and discount series.

  • markdown
  • sale price
  • trade discount
  • net price
  • list price
  • rate of discount
  • discount series
  • single equivalent rate of discount

Business Markup and Selling Price

  • Markup
  • Selling Price
  • Operating Expenses
  • Cost
  • Rate of markup
  • Percent of cost
  • Percent of selling price

Payment Terms and Cash Discounts

An overview of payment terms, cash discounts, and dating methods including ordinary dating, end-of-month dating, and receipt-of-goods dating.

  • Payment terms
  • Cash discounts
  • Ordinary dating
  • End-of-month dating
  • Receipt-of-goods dating
  • Discount period
  • Credit period
  • Partial payment

Cost-Volume-Profit Analysis and Break-Even

This material covers cost-volume-profit analysis, break-even points, and the use of break-even charts to determine profitability.

  • Cost-volume-profit analysis
  • Break-even point
  • Contribution margin
  • Fixed costs
  • Variable costs
  • Total revenue
  • Total cost
  • Break-even charts
  • Selling price per unit
  • Volume of output

Calculating Break-Even Points and Profit

Examples and methods for calculating break-even quantity, profit, fixed costs, variable costs, and price using total sales and unit values.

  • break-even point
  • fixed costs
  • variable costs
  • profit
  • break-even quantity
  • total sales
  • revenue function
  • net income

Financial Mathematics and Practice Problems

Financial Mathematics Class Exercises

Class exercises involving original payments, interest rates, promissory notes, and treasury bills.

  • original payments
  • interest rate
  • focal date
  • loan repayment
  • promissory note
  • face value
  • maturity date
  • maturity value
  • opportunity cost of capital
  • treasury bills
  • annual rate of return

Chapter 8 Practice Problems

Practice problems involving six-month notes, treasury bills, present value, and yield rates.

  • six-month note
  • present value
  • treasury bills
  • yield rate
  • market price
  • rate of return

Fundamentals and Applications of Simple Interest

Introduction to Simple Interest

Simple interest is paid to compensate lenders for the use of money based on the amount borrowed, the rate of interest, and the time period.

  • Simple interest
  • Amount of money borrowed
  • Rate of interest
  • Time period
  • Term deposits
  • Short-term investments
  • Canada savings bonds
  • Lines of credit
  • Credit card transactions
  • Purchases on credit
  • Short-term loans

Calculation of Simple Interest

This topic covers the calculation of simple interest using the formula I = Prt and matching the interest rate with the interest period.

  • Simple interest formula
  • Principal sum of money
  • Simple annual rate of interest
  • Interest period in years
  • Converting months and days to years

Computing Future Value and Present Value

Computing future value, maturity value, and finding the principal or present value using simple interest formulas.

  • Future Value
  • Maturity Value
  • Principal
  • Simple Interest
  • Present Value
  • Interest Rate
  • Equivalent Values

Equations of Values and Simple Interest

Calculating equivalent payments and loan repayments using simple interest and focal dates.

  • Simple Interest
  • Equations of Values
  • Focal Date
  • Equivalent payments
  • Loan Repayments
  • Present Value
  • Principal

Simple Interest Applications for Promissory Notes

This material covers computing maturity value and present value for interest-bearing and non-interest-bearing promissory notes and treasury bills.

  • Promissory note
  • Interest-bearing promissory note
  • Non-interest-bearing promissory note
  • Maker
  • Payee
  • Face value
  • Rate of interest
  • Date of issue
  • Term
  • Due date
  • Interest period
  • Maturity value
  • Treasury bills

Maturity and Present Value of Promissory Notes

Calculating the maturity value of interest-bearing promissory notes and determining their present value.

  • Maturity value of interest-bearing promissory notes
  • Face value of the note
  • Rate of interest
  • Interest period
  • Present value of promissory notes

Understanding Canadian Treasury Bills

Treasury bills are promissory notes issued by the federal and provincial governments that are purchased at a discounted price.

  • Treasury bills
  • Promissory notes
  • Face value
  • Discounted price
  • Present value calculation
  • Rate of return
  • Maturity

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