Term
| Sinking funds are provisions included in bond indentures that require companies to retire bonds on a scheduled basis prior to their final maturity. Many indenture allow the company to acquire bonds for sinking fund purposes by either (1) purchasing binds on the open market at the going arket price or (2) selecting the bonds to be called by a lottery administered by the trustee, in which case the price paid is the bond's face value |
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| The price sensitivity of a bond to a given change in interest rates is genreally greater the longer the bond;s remaining maturity |
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| A call provision gives bondholders the right to demand, or "call for," repayment of a bond. Typically, companies call bonds if interest rates rise and do no call them if interest rates decline. |
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| Starting to invest early for retirement reduces the benefits of compound interest |
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Definition
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| Starting to invest early for retirement increases the benefits of compound interest |
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Term
| If a bank compounds sacings accounts quarterly, the effective annual rate will exceed the nominal rate |
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Term
| If a bank compounds sacings accounts quarterly, the nominal rate will exceed the effective annual rate. |
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| The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The closer we are to the end of the loan's life, the greater the percentage of the payment that will be a repayment of principal. |
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Definition
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Term
| The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The closer we are to the end of the loan's life, the smaller the percentage of the payment that will be a repayment of principal. |
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Term
| If we are given a period interest rate, say a monthly rate, we can find the nominal annual rate by multiplying the periodic rate by the number of periods per year. |
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Definition
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Term
| If we are given a period interest rate, say a monthly rate, we can find the nominal annual rate by dividing the periodic rate by the number of periods per year. |
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Definition
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