Flashcards
Chapter 10 and 12 key terms
Cards in this deck (26)
- 1Adjusted BalanceThe balance after partial payment less interest is subtracted from the principal.
- 2Banker's RuleTime is exact days / 360 in calculating simple interest.
- 3Exact InterestCalculating simple interest using 365 days per year in time.
- 4InterestPrincipal * Rate * Time
- 5Maturity ValuePrincipal plus interest (if interest is charged). Represents amount due on the due date.
- 6Ordinary InterestCalculating simple interest using 360 days per year in time.
- 7PrincipalAmount of money that is originally borrowed, loaned, or deposited.
- 8Simple interestInterest 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.
- 9Simple Interest FormulaInterest = Principal * Rate * Time
- 10TimeExpressed as years or fractional years, used to calculate simple interest.
- 11U.S. RuleMethod that allows the borrower to receive proper interest credits when paying off a loan in more than one payment before the maturity date.
- 12Annual 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.
- 13Compound AmountThe future value of loan or investment.
- 14Compound interestThe 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).
- 15Compounded AnnuallyInterest on balance calculated once a year.
- 16Compounded DailyInterest calculated on balance each day.
- 17Compounded MonthlyInterest on balance calculated twelve times a year.
- 18Compounded QuarterlyInterest on balance calculated four times a year.
- 19Compounded SemiannuallyInterest on balance calculated two times a year.
- 20CompoundingCalculating the interest periodically over the life of the loan and adding it to the principal.
- 21Effective RateTrue rate of interest. The more frequent the compounding, the higher the effective rate.
- 22Future Value (FV)Final amount of the loan or investment at the end of the last period
- 23Nominal RateStated rate.
- 24Number of PeriodsNumber of years times number of times interest is compounded per year.
- 25Present 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).
- 26Rate for each PeriodAnnual rate divided by number of times interest is compounded in one year.
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- Flashcards on Chapter 10 and 12 key terms, created by Jared Beaver on 17/09/2023.
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- Jared Beaver
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