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