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14 Cards in this Set

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A finite series of equal payments that occur at regular intervals:
Annuity
Treasury bills are examples of _____ loans.
Pure discount
What are the 2 types of annuities?
1) ordinary annuity (end)
2) annuity due (beginning)
The actual rate paid or received after accounting for compounding that occurs during the year:
Effective Annual Rate (EAR)
When is the first payment of an ordinary annuity due?
At the end of the period
A loan that you borrow today and pay only interest over the life of the loan:
Interest only loan (full principle is paid at the end of contract)
Rate that is quoted by law:
Annual percentage rate
A loan that you borrow today and pay back later in full plus all interest (lump sum):
Pure discount loans
An infinite series of equal payments:
Perpetuity
What is used to compare investments with different compounding periods?
Effective Annual Rate (EAR)
When does the first payment of an annuity due occur?
At the beginning of the period
In an amortized loan with a fixed payment _____ is paid early and _____ is paid late.
Interest, principle
A loan that you borrow today and pay back principle and interest in equal installments:
Amortized loan with fixed payment
What stays constant and what changes in an amortized loan with a fixed payment?
Payments are constant.

The proportion of interest and principle changes.