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Interest - Chapter 9
Interest - Chapter 9
19
Business
11th Grade
05/21/2012

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Term
Simple Interest
Definition
Interest paid or figured on the original amount only of a loan or on the amount of an account.
Term

Principal

(Face Value)

Definition
The initial amount borrowed or invested for a certain period of time.
Term
Interest
Definition
The fee charged by a lender to a borrower for the use of borrowed money.
Term
Rate
Definition
An amount which is paid for the use of money.  Often expressed as annual percentage of the principal.
Term
Time
Definition
Period of time you have to repay the loan or to earn interest on your invested money.
Term

Ordinary Interest

 

Definition
Method of computer interest based on 360-days.
Term
Exact Interest
Definition

Method of computer interest based on 365-days.

(366 days on leap year).

Term
Maturity Value
Definition
The full amount of money that must be repaid when the loan is due; the principal plus the interest.
Term
Maturity Date
Definition
The date on which the principal and interest associated with a debt security must be repaid in its entirety.
Term
Promissory Note
Definition
A document signed by the borrower promising to repay a loan under agreed-upon terms.
Term
Interest-bearing note
Definition
A promissory note that states an interest rate
Term
Non-interest-bearing note
Definition
A note that does not specify an interest rate
Term
Bank discount
Definition
Interest that is collected in advance by a bank
Term
Proceeds
Definition
The amount the borrower receives (maturity value less the bank discount).
Term
the Maker
Definition
The person or business borrowing the money.
Term
Payee
Definition
The person or business who lent the money and who will receive the repayment.
Term
Face Value or Principal
Definition
The dollar amount of the note/promissory note
Term

Maturity date

(Due Date)

Definition
Date the loan is to be repaid
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