5 TVM 2: Analysing Annuity Cash Flows Flashcards
Contains key definitions ONLY.
Add-on interest.
A calculation of the amount of interest determined at the beginning of the loan and then added to the principal.
Amortisation schedule.
A table detailing the periodic loan payment, interest payment, and debt balance over the life of the loan.
Amortised loan.
A loan in which the borrower pays interest and principal over time.
Annual percentage rate (APR).
The interest rate per period times the number of periods in a year.
Annuity.
A stream of level and frequent cash flows paid at the end of each time period - often referred to as an ordinary annuity.
Annuity due.
An annuity in which cash flows are paid at the beginning of each time period.
Consols.
Investment assets structures as perpetuities.
Effective annual rate (EAR).
An interest rate that reflects annualising with compounding figured in.
Loan principal.
The balance yet to be paid on a loan.
Perpetuity.
An annuity with cash flows that continue forever.
