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Simple Interest and Simple Discount
Terms in this set (19)
The amount of money borrowed or invested.
An amount paid or earned for the use of money.
Interest paid on only the principal of the original loan or investment.
The percent of the principal paid as interest per time period.
The number of days, months, or years that the money is borrowed or invested.
Prime interest rate (prime), reference rate, or base lending rate
The lowest rate of interest charged by banks for short-term loans to their most creditworthy customers.
Federal funds rate
The interest rate when banks actively trade balances held at the Federal Reserve with each other, usually overnight. Banks with surplus balances in their accounts lend those balances to banks in need of larger balances on a short term basis.
The total amount of money due at the end of a loan period--the amount of the loan and the interest.
Assumes 360 days per year.
Assumes 365 days per year.
Calculating interest on a loan based on ordinary interest--which yields a slightly higher amount of interest.
Any partial loan payment first covers any interest that has accumulated. The remainder of the partial payment reduces the loan principal.
The remaining principal after a partial payment has been properly credited.
Adjusted balance due at maturity
The remaining balance due at maturity after one or more partial payments have been made.
Another term for a simple interest note.
Effective interest rate of a simple discount note
The actual interest rate based o the proceeds of the loan.
An investment group or individual that assumes a note that was made between two other parties.
Third-party discount note
A note that is sold to a third party (usually a bank) so that the original payee gets the proceeds immediately and the maker pays the third party the original amount at maturity.
The amount of time that the third party owns the third-party discounted note.
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