Finance: Annuities, Perpetuities, and Interest Rates

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Last updated 6:52 PM on 10/9/26
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7 Terms

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Annuity

A level stream of cash flows for a fixed period of time.

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Annuity due

An annuity for which the cash flows occur at the beginning of the period.

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Perpetuity

An annuity in which the cash flows continue forever.

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Consol

A type of perpetuity.

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Stated interest rate

The interest rate expressed in terms of the interest payment made each period. Also known as the quoted interest rate.

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Effective annual rate (EAR)

The interest rate expressed as if it were compounded once per year.

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Annual percentage rate (APR)

The interest rate charged per period multiplied by the number of periods per year.