Math of Finance Flashcards
is a quick and easy method of calculating the interest charge on a loan. It is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
Simple Interest
is the capital or sum of money borrowed or invested.
Principal
it is calculate as a percent of the principal
Interest
This is the fraction part of the principal that is paid on the loan or investment, which is usually expressed as percent
Rate
The number of years for which the money is borrowed or invested
Time
The sum composed of the principal and interest accumulated over a certain period of time
Future Value/Maturity Value
Interest Earned
I
Interest Rate
r
number of years
t
Principal or present value
P
future vale or accumulated value
F
I = ?
Prt
F = ?
P + I
P(1+rt)
is an interest computed every conversion period whose principal amount includes the specified interest earned every end of the conversion date.
Compound Interest
This is the interest resulting from the periodic addition of simple interest to the principal amount.
Compound Interest
This is an accumulated amount composed of the principal and the compound interest.
Compound Amount
This refers to the number of times in a year the interest will be compounded.
Conversion Period
If interest is compounded either annually, semi- annually, quarterly, or monthly, basic compound interest
F = P * (1 + j/m) ^ (mt)
I = F - P or F = P * (1 + i) ^ n
I
Compound Interest
i
period rate (i = j/m)
n
number of conversion periods for the whole term (n = mt)
m
number of conversion periods
t
time or term of investment which is expressed in years
j
- nominal rate of interest per year (r in simple interest)
is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder’s promise to the card issuer to pay them for the amounts so paid plus the other agreed charges.
Credit Card
, is essentially the cost of spending money on your credit card, including basic interest rates as well as any other relevant fees.
APR or Annual Percentage Rate
One thing you should avoid doing at all costs is withdrawing cash from an ATM using your credit card. If you do so, you will rack up hefty cash advance charges and so unless it’s absolutely necessary to use your credit card, you should always stick to using your debit card to take cash out.
Cash Advance Fees
are unity of equity, or ownership stake, in a company.
Stocks
means the equality of being fair and impartial.
Equity
are simply loans made to an organization, They are a form of debt and appear as liabilities in the organization’s balance sheet.
Bonds
Bonds are a type of investment known as a?
Debt Security
