|
|
Glossary
|
|
A
|
|
Accrued Interest Interest earned but not collected.
|
|
Add-on Interest RateA
term used in consumer finance to represent a particular method of
calculating a finance charge. That is, when a loan is made a year’s
simple interest is “added-on” to the principal amount for each year of
the life of the loan.
|
|
AmortizationThe
gradual reduction of any amount over a period of time. A general term
which includes various specific practices such as depreciation,
depletion, write-off of intangibles, prepaid expenses, and deferred
charges.
|
|
AnnuityA series or one of a series of equal payments at fixed intervals; the right to receive such payments.
|
|
APRAnnual
Percentage Rate. Actual cost of a loan expressed as annual percent
rate as required by U. S. Federal Reserve (Reg. Z—Truth-in-Lending).
|
|
B
|
|
BondA certificate of indebtedness in writing and often under seal.
|
|
Bond PriceThe
price an investor is willing to pay for a bond. Involved is the
determination of a value based on the redemption price of a bond when
held to maturity or earlier date, the nominal or coupon rate of
interest, and the effective rate or desired yield.
|
|
Bond YieldThe
effective annual rate of return to an investor when a bond is bought at
a given price, pays a nominal or stated coupon rate and is held to
maturity or earlier date.
|
|
C
|
|
Callable BondA
type of bond permitting the issuer to pay the obligation before
maturity by giving notice of redemption in a manner specified in the
indenture.
|
|
Chain DiscountA series of trade discount percentages or their total.
|
|
Compound InterestInterest
resulting from the periodic addition of simple interest to principal,
the new base thus established being the principal for the computation of
interest for the following period.
|
|
Coupon RateThe rate at which dividends are paid to the bond holder expressed as an annual percent of the bond’s face value, or par.
|
|
