Chapter 8 Key Terms & Definitions Flashcards
Amortization period
The total amount of time required to fully repay a mortgage
Compounding frequency
The number of times per year in which an interest rate is charged. Typical compounding frequencies include semi-annually and monthly.
EFF%
The J1 rate or the annual interest rate with only one compounding period
Equivalent interest rate
A rate that is equal to another. Two rates are said to be equal if, for the same amount borrowed over the same period of time, the same amount is owed at the end of that period
Floating decimal place
The calculator provides the answer on the display to the number of places the number requires without rounding.
FV
The future value also referred to as the outstanding balance at a given point in time.
HP10BII
The financial calculator used to complete several mortgage calculations
Interest rate
The rate at which interest, which is a fee paid to the lender for borrowing money, is calculated
Interest rate conversion
The process of converting a rate to its equivalent with a different frequency of compounding
Mortgage amount
The amount of money borrowed, also referred to as the present value
N
The key on the HP10BII representing the total number of compounding periods required to repay a mortgage
NOM%
The key on the HP10BII representing the annual rate of interest
Outstanding balance
The same as the future value, this is the amount owed at a given point in time
P/YR
The key on the HP10BII representing the total number of compounding periods per year
PMT
The key on the HP10BII representing the payment or the amount required to be repaid per compounding period
