Chapter 3: Cashflow Models Flashcards
What is cash flow?
Cash flow refers to the sums of money that are paid or received at specific times. They can be positive (money received) or negative (money paid).
What is a zero-coupon bond?
A zero-coupon bond is a security that provides a lump sum payment at a specific future date and no other positive cash flows until maturity.
What is a fixed interest security?
A fixed interest security provides regular interest payments over time and a lump sum repayment of the principal at a specified future date.
What is cash on deposit?
Cash on deposit refers to money held in accounts where the cash flow (interest) and timing of withdrawals are usually unknown or variable.
What are equity shares?
Equity shares represent ownership in a company, entitling shareholders to dividends based on the company’s profit and the number of shares owned.
What is an annuity?
An annuity is a series of regular payments made over a fixed term, either for a set number of years or for the lifetime of the holder.
What is an interest-only loan?
An interest-only loan requires periodic interest payments with the principal amount repaid in full at the end of the loan term.
What is a repayment loan?
A repayment loan involves regular payments that include both interest and partial repayment of the principal, reducing the loan balance over time.
