mmw finals

Simple Interest

A fixed percentage of the principal (the total amount invested) paid to a depositor or an investor each year the principal is left on deposit or has been invested; usually denoted by I. Also, a fixed amount paid to a bank or any lender each year the principal has been borrowed

Compound Interest

Interest computed on the sum of the original principal of a deposit or loan and the interest accumulated. It is denoted by !c

Conversion Period

The interval at which interest is compounded; one (1) conversion period equals one (1) year when compounded annually

Frequency of Conversion (m)

The number of times interest is computed in one year

Time (t)

The number of years the money is invested or borrowed

Total Number of Conversion Periods (n)

The product of the number of years (t) and the frequency of conversion (m), i.e., n = t × m

Stocks

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. Stocks are classified into two types: common stock and preferred stock

Bonds

A certificate or a written contract in which the debtor promises to pay its holder a specified amount of money, plus a certain rate of interest at a stated future date

Par Value

Usually the price the investor pays when buying the bond from the issuing company. An investor may sell the bond at any time to another investor