F. Ernest Jerome
| Cash flow | Refers to a cash disbursement (cash outflow) or a cash receipt (cash inflow).
(See page 314.)
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| Cash flow sign convention | Rules for using an algebraic sign to indicate the direction of cash movement. Cash inflows (receipts) are positive, and cash outflows (disbursements) are negative.
(See page 314.)
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| Compounding frequency | The number of compoundings that take place per year.
(See page 287.)
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| Compounding period | The time interval between two successive conversions of interest to principal.
(See page 286.)
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| Compound interest method | The procedure for calculating interest wherein interest is periodically calculated and added to principal.
(See page 286.)
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| Discounting a payment | The process of calculating a payment's present value.
(See page 303.)
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| Discount rate | The interest rate used in calculating the present value of future cash flows.
(See page 303.)
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| Future value | (1) A payment's equivalent value at a subsequent date, allowing for the time value of money. (2) The total of principal plus the interest due on the maturity date of a loan or investment.
(See page 290.)
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| Maturity value | The total of principal plus the interest due on the maturity date of a loan or investment.
(See page 290.)
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| Nominal interest rate | The stated annual interest rate on which the compound-interest calculation is based.
(See page 287.)
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| Periodic interest rate | The rate of interest earned in one compounding period.
(See page 287.)
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| Present value | An economically equivalent amount at an earlier date.
(See page 303.)
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| Strip bond | An investment instrument entitling its owner to receive only the face value of a bond at maturity.
(See page 323.)
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2003 McGraw-Hill Higher Education