Flashcards
Chapters 11 & 12: Promissory Notes, Discount Process, Compound Interest, and Present Value
Cards in this deck (24)
- 1Promissory NoteWritten promise to pay a sum on a future date.
- 2Face Value (Principal)Principal amount borrowed.
- 3TermTime length of the loan.
- 4Maturity DateDate principal + interest are due.
- 5Interest-Bearing NoteStates an interest rate.
- 6Non-Interest-Bearing NoteNo interest; repay only face value.
- 7Simple Discount NoteInterest deducted in advance.
- 8Bank DiscountInterest deducted by bank. Formula: FV × Rate × Time.
- 9ProceedsAmount received after discount. Formula: MV – Bank Discount.
- 10Maturity ValueTotal due at end of loan.
- 11Effective RateTrue cost of borrowing; higher than stated rate.
- 12Treasury Bill (T-Bill)Short-term government debt sold at discount.
- 13Discounting ProcessSelling a note to bank before maturity.
- 14Compound InterestInterest on principal + past interest.
- 15Future Value (FV)Final amount at end of periods
- 16Present Value (PVValue today of future money.
- 17CompoundingPeriodic calculation of interest.
- 18Nominal RateStated interest rate.
- 19APY (Effective Rate)Real yearly rate with compounding
- 20Number of Periods (N)Years × compounding per year
- 21Rate per Period (RAnnual rate ÷ compounding times.
- 22Compound AmountFV from multiplying principal × table factor.
- 23Table LookupUsing tables to find FV or PV.
- 24Truth in Savings LawRequires banks to show APY.
Information
- Description
- Flashcards with key terms from Chapters 11 and 12 of Practical Business Math Procedures. Topics include promissory notes, simple discount notes, bank discount, proceeds, effective rate, compound interest, future value, present value, APY, and time value of money. Designed for quick review and exam preparation.
- Created by
- Edilyadiel Gonzalez · Sep 2025
- Updated
- Sep 14, 2025
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