2 - Compound Interest
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12 Terms
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Compound Interest
- interest calculated on the total of the principal and previously calculated interests
- calculated as the difference between the compound amount and the original or principal amount
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Compounding Period
- time interval it takes for money to earn interest in a year
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1
- annually
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2
- semiannually
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4
- quarterly
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6
- bimonthly
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12
- monthly
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24
- semimonthly
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360
- daily
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Nominal Rate
- annual interest rate that does not take into account the compounding period
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Periodic Rate
- interest rate per compounding period equal to the nominal rate divided by the number of compounding periods in a year
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Compound Amount
- accumulated value of the principal and all interests from prior periods
Note 
Flashcards (240)