Term

Definition
Different debt instruments have very different streams of cash payments to the holder with different timing 


Term
Present Value/ Present Discounted Value 

Definition
Based on commonsense notion that a dollar paid to you one year from now is less valuable to you than a dollar paid to you today 


Term

Definition
The lender provides the borrower with an amount of funds (principal) that must be repaid to the lender at the maturity date, along with an additional payment of interest 


Term
Fixedpayment loan (fully amortized loan) 

Definition
the lender provides the borrower with an amount of funds, which must be repaid by making the same payment every period (such as a month), consisting of part of the principal and interest for a set number of years 


Term

Definition
pays the owner of the bond a fixed interest payment (coupon payment) every year until the maturity date , when a specified final amount (face value or par value) is repaid 


Term
Discount bond/ ZeroCoupon Bond 

Definition
is bought at a price below its face value (at a discount) and the face value is repaid at the maturity date 


Term

Definition
the interest rate that equates the present value of cash flow payments received from a debt, instrument with its value today 


Term

Definition
the simple interest rate equals the yeild to maturity 


Term

Definition
It is a perpetual bond with no maturity date and no repayment of principal that makes fixed coupon payments of $C (yearly coupon pmts) forever 


Term

Definition
The yearly coupon payment divided by the price of the security and is frequently used as an approximation to describe interest rates on longterm bonds 


Term
How are current bond prices and interest rates related? 

Definition
Negatively related: when the interest rate rises, the price of the bond falls, and vice versa 


Term

Definition
how well a person does by holding a bond or any other security over a particular time period is accurately measured 


Term

Definition
the return on a bond will not necessarily equal the yeild to maturity on that bond 


Term

Definition
the change in the bond's price relative to the initial purchase price 


Term

Definition
the riskiness of an assets return that results from interestrate changes is so important that it has been given a special name 


Term

Definition
what we have up to now been calling the interest rate makes no allowance for inflation 


Term

Definition
The interest rate that is adjusted by subtracting expected changes in the price level (inflation) so that it more accurately reflects the true costs of borrowing 


Term

Definition
in terms of real goods and services you can buy 


Term
When real interest rate is low, 

Definition
there are greater incentives to borrow and fewer incentives to lend 


Term

Definition
whose interest and principal payments are adjusted for changes in the prive level 

