38952457
Description
Flashcards by Jared Beaver, updated 9 months ago
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Created by Jared Beaver
9 months ago
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| Question | Answer |
| Adjusted Balance | The balance after partial payment less interest is subtracted from the principal. |
| Banker's Rule | Time is exact days / 360 in calculating simple interest. |
| Exact Interest | Calculating simple interest using 365 days per year in time. |
| Interest | Principal * Rate * Time |
| Maturity Value | Principal plus interest (if interest is charged). Represents amount due on the due date. |
| Ordinary Interest | Calculating simple interest using 360 days per year in time. |
| Principal | Amount of money that is originally borrowed, loaned, or deposited. |
| Simple interest | Interest is only calculated on the principal. In I = P x R x T, the interest plus original principal equals the maturity value of an interest-bearing note. |
| Simple Interest Formula | Interest = Principal * Rate * Time |
| Time | Expressed as years or fractional years, used to calculate simple interest. |
| U.S. Rule | Method that allows the borrower to receive proper interest credits when paying off a loan in more than one payment before the maturity date. |
| Annual Percentage yeild (APY) | Truth in savings law forced banks to report actual interest in form of APY. Interest yield must be calculated on actual number of days banks has the money. |
| Compound Amount | The future value of loan or investment. |
| Compound interest | The interest that is calculated periodically and then added to the principal. The next period the interest is calculated on the adjusted principal ( old principal plus interest). |
| Compounded Annually | Interest on balance calculated once a year. |
| Compounded Daily | Interest calculated on balance each day. |
| Compounded Monthly | Interest on balance calculated twelve times a year. |
| Compounded Quarterly | Interest on balance calculated four times a year. |
| Compounded Semiannually | Interest on balance calculated two times a year. |
| Compounding | Calculating the interest periodically over the life of the loan and adding it to the principal. |
| Effective Rate | True rate of interest. The more frequent the compounding, the higher the effective rate. |
| Future Value (FV) | Final amount of the loan or investment at the end of the last period |
| Nominal Rate | Stated rate. |
| Number of Periods | Number of years times number of times interest is compounded per year. |
| Present Value (PV) | How much money will have to be deposited today (or at some date) to reach a specific amount of maturity (in the future). |
| Rate for each Period | Annual rate divided by number of times interest is compounded in one year. |
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