Lecture 1 Flashcards
1
Q
General Present Value Formula
A
2
Q
Discount Factor for year t
A
3
Q
Annual Percentage Rate (APR)
A
The quoted rate
4
Q
Effective Annual Rate (EAR)
A
5
Q
PV of a perpetuity
A
6
Q
PV of an Annuity
A
7
Q
Compounding
A
the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes.
8
Q
Perpetuity
A
Perpetuity refers to an infinite amount of time. In finance, it is a constant stream of identical cash flows with no end, such as with the British-issued bonds known as consols. The concept of a perpetuity is also used in financial theory, such as in the dividend discount model (DDM).
9
Q
Real interest rate formula
A
10
Q
Growing perpetuity formula
A
