MATH 1206 Test 3 Review

A set of flashcards covering key concepts related to future value calculations, interest compounding, and investment attributes as discussed in the MATH 1206 lecture on financial mathematics.

Future Value

The amount to which an investment will grow over a specified period at a given interest rate.

Compounded Quarterly

Interest calculated four times a year.

Compounded Monthly

Interest calculated twelve times a year.

Nominal Rate of Interest

The stated interest rate before adjustment for inflation.

Effective Interest Rate

The interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest.

Accumulated Value

The total amount of money accumulated after a certain period, including both principal and interest.

Principal

The original sum of money borrowed in a loan or invested.

Investment Doubling Time

The period required for an investment to double in value, typically calculated using the Rule of 72.

Labelled Timeline

A graphical representation used to illustrate the timing of cash flows.

Interest Earned

The amount gained from an investment over a period.

Yield Rate

The income generated from an investment, expressed as a percentage.

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods.