Basic Long-Term Financial Concepts Flashcards
1
Q
is earned or incurred for the use of principal amount over the relevant time period
A
INTEREST
2
Q
- simply interest on interest
A
COMPOUND INTEREST
3
Q
- the basis for computation of the applicable interest is not only the original principal but also any interest earned
A
COMPOUND INTEREST
4
Q
Types of Time Value of Money
A
- Lump-Sum Payment
- Annuity
5
Q
represents single, complete payment made in full at one time, rather than being spread out over a period of time or divided into installments
A
LUMP-SUM PAYMENT
6
Q
refers to equal payments occurring at equal periods of time
A
ANNUITY
7
Q
payments are made at the end of each period
A
ORDINARY ANNUITY
8
Q
payments are made at the beginning of each period
A
ANNUITY DUE
9
Q
postponed or delayed at a later time
A
DEFERRED
10
Q
like ordinary annuity except that the payments continue infinitely
A
PERPETUITY
