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Vocabulary 11
vocab
9
Economics
11th Grade
02/01/2013

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Term
Simple Interest
Definition
Interest calculated only on money deposited, not on prior interest earned.
Term
Compound Interest
Definition
Interest calculated on both depositsmade and prior interest earned.
Term
Rule of 72
Definition
A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
Term
Tax Exempt
Definition
a security that is not subject to taxation.
Term
tax deferred
Definition
An investment in which some or all taxes are paid at a future date, rather than in the year the investment produces income.
Term
annual percentage
Definition
The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.
Term
yield (APY)
Definition
The effective annual rate of return taking into account the effect of compounding interest
Term
certificate of deposit
Definition
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.
Term
U.S. savings bond
Definition
A U.S. government savings bond that offers a fixed rate of interest over a fixed period of time. Many people find these bonds attractive because they are not subject to state or local income taxes. These bonds cannot be easily transferred and are non-negotiable.
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