Fundamentals of Financial Institutions Flashcards
0
Q
What is the rate of interest
A
Measure of growth on a sum of money (usually measured as a percent per annum, % PA)
1
Q
What is interest?
A
The cost of funds paid by the borrower to the lender
2
Q
What is yield?
A
Interest rate on a tradable security (usually yield to maturity - rate of return assuming security is held to maturity)
3
Q
What is present value?
A
The starting amount invested or borrowed, or value today of future payments.
4
Q
What is future value?
A
The terminal value of a loan or investment (such as the face value of a security, or the accumulated value of a sum or series of payments)
F = P + I
