Studied by 33 people
Looks like no one added any tags here yet for you.
Compounding
involves the calculation of interest periodically over the life of the loan or investment
Compound Interest
the interest on the principal plus the interest of prior periods
Future Value
the final amount of the loan or investment at the end of the last period
Present Value
the value of a loan or investment today
Number of periods
number of years multiplied by the number of times the interest is compounded per year
Rate for each period
annual interest rate divided by the number of times the interest is compounded per year
Effective rate
(Truth in Savings law) the percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365-day period
Nominal Rate
the rate on which the bank calculates interest.
Annuity
a series of payments of equal amounts at equal intervals for a specified number of periods
Term of the annuity
the time from the beginning of the first payment period to the end of the last payment period
Future value of annuity
The future dollar amount of a series of payments plus interest.
Present value of an annuity
the amount of money needed to invest today in order to receive a stream of payments for a given number of years in the future
Ordinary Annuity
an annuity whose payments occur at the end of each period
Annuity Due
an annuity whose payments occur at the beginning of each period
Sinking Fund Payments
a financial arrangement that sets aside regular periodic payment of a particular amount of money
Lump-sum
a single payment
Annuity
a stream of payments over the term of the annuity
Annuities Certain
have a specific stated number of payments
Contingent Annuities
have no fixed number of payments but depend on an uncertain event
Annuities Certain
regular deposits/payments made at the beginning of the period
Contingent Annuities
regular deposits/payments made at the end of the period
