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18 Cards in this Set
- Front
- Back
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What will you gain if you invest your money? |
Interest |
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Interest paid on only the original amount or principal borrowed |
Simple interest |
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Interest paid on any interest earned as well as the principal borrowed |
Compound interest |
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"The money received today is worth more than a money received in the future" |
Time value of money |
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Projected sum of money at some point in the future |
Future value |
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The value of sum of money at present time |
Present value |
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A process of finding the present value of a cash flow or cash flows the reverse of compounding |
Discounting |
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Any situation in which you have equal cash flows occuring at equal intervals for a fixed period of time |
Annuity |
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2 classification of annuity |
1. Ordinary/deferred annuity 2. Annuity due |
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End of the month |
Ordinary annuity |
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Beginning/immediately |
Annuity due |
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The present value of an annuity for N periods |
Present value of an annuity |
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A stream of equal payments at fixed intervals expected to continue forever |
Perpetuities |
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An annuity with extended life |
Perpetuities |
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When the interest rate increases, the prices of the bond |
Decreases |
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A series of Cash Flow where the amount varies from one period to next |
Uneven cash flows |
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Basic... |
1. Each consumer has complete information pertaining to consumption m decisions 2. Each customer is able to rank all conceivable bundles of goods 3. Preferences are transitive 4 more bundles are preferred than less |
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"Usefulness" |
Utility |
