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8 Cards in this Set
- Front
- Back
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Interest |
Reward paid by one person or organisation (the borrower) for the use of an asset, referred to as capital, belonging to another person or organisation (the lender). |
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Principal |
Capital and interest are expressed in monetary terms. |
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Accumulated value |
Total received by the lender after a period of time. |
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Interest |
Difference between the principal and the accumulated value. |
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Risk premium |
Some risk of default (i.e., loss of capital or non-payment of interest), a lender would expect to be paid a higher rate of interest, then additional interest is known as risk premium. |
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Simple interest |
Interest, once credited to an account, does not itself earn further interest. |
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Simple interest in terms of days |
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Compound interest |
Interest itself earns interest |
