Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
12 Cards in this Set
- Front
- Back
|
time value of money |
the difference in value between a dollar in hand today and a dollar promised in the future; a dollar today is worth more than a dollar in the future. |
|
|
time zero |
the beginning of a transaction; often the current point in time |
|
|
future value (FV) |
the value of an investment after it earns interest for one or more periods |
|
|
principal |
the amount of money on which interest is paid |
|
|
simple interest |
interest earned on the original principal amount only |
|
|
interest on interest |
interest earned on interest that was earned in previous periods |
|
|
compounding |
the process by which interest earned on an investment is reinvested, so in future periods interest is earned on the interest as well as the principal |
|
|
compound interest |
interest earned both on the original principal amount and on interest previously earned |
|
|
discounting |
the process by which the present value of future cash flows is obtained |
|
|
discount rate |
the interest rate used in the discounting process to find the present value of future cash flows |
|
|
present value (PV) |
the current value of future cash flows discounted at the appropriate discount rate |
|
|
compound growth rate (CAGR) |
the average annual growth rate over a specified period of time |
