Loans

Question 1

Prospective Outstanding Balance

Answer 1

Present Value of all future payments

R = Level Payments

R * a (n - t)|i

Question 2

Retrospective Outstanding Balance

Answer 2

Current Value of all payments minus accumulated value of all past payments

R * (ani * (1 + i) ^ t - st|i)

Question 3

Total Interest for a loan with n payments of 1

Answer 3

n - an|i

Question 4

Interest Period T for a loan with n payments of 1

Answer 4

1 - v^n - t + 1

Question 5

Total Principal Repaid for a loan with n payments of 1

Answer 5

a n|i

Question 6

Principal Repaid during Period T for a loan with n payments of 1

Answer 6

v^n - t + i

Question 7

balloon paymen

Answer 7

An oversized payment due at the end of a mortgage, commercial loan or other amortized loan. Because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.

Question 8

drop payment

Answer 8

Probably if it is less than the others i think.

Question 9

Amortization

Answer 9

The paying off of debt with a fixed repayment schedule in regular installments over a period of time. Consumers are most likely to encounter amortization with a mortgage or car loan.

Question 10

Sinking Fund (Formula for Interest and Sinking Fund Deposits)

Answer 10

I = B * i *interest rate on loan

SFD = B / (sn|i) *interest on sinking fund

where B is loan balance

Question 11

Purpose of a Sinking Fund

Answer 11

A sinking fund allows the investor to accumulate some of the principal in an interest bearing savings account which helps offset some of the cost involved. Note the interest in the savings account is usually lower than that on the bond.

Question 12

Principal paid in t = Principal paid in t + 10 by what.

Answer 12

(Principal paid in t) * (1 + i) ^ (t + 10 - t)= Principal paid in t + 10