Chapter 12

factoring

(mathematics) the resolution of an integer or polynomial into factors such that when multiplied together they give the integer or polynomial Factoring the value

recourse

(n.) a person or thing turned to for help or advice; the act of seeking help or protectio

payee

A person or company who will receive payment on a promissory note, check, draft or money order which is the Payee

discount

A vond trading in the market at a price below its face value. The amount a bond's market price is below its face value. Securities that are issued for less than their face value and mature at par, such as t-bills. At maturity, the difference between the purchase price and the face amount is considered interest Discount price and the difference.

promissory note

A written contract with a Promissory note to pay a supplier a specific sum of money at a definite time.

collateral

Anything of value belonging to the borrower that is pledged to the lender to guarantee that the loan will be repaid Collateral in effect

maker

In reference to a check, any individual, corporation, or legal party who signs a check or any type of negotiable instrument Maker

factors

Inputs into the productive process of a firm, including labor, management, land, capital, and technological know-how Factors work in the money

rediscounted

Interest charged by the BSP to banks who wish to borrow from it Rediscounted from the banks

nominal interest rate

It is the rate of interest before adjustment for inflation. The real interest rate is the Nominal interest ratE minus inflation. In the case of a loan, it is this real interest that the lender receives as income. If the lender is receiving 8 percent from a loan and inflation is 8 percent, then the real rate of interest is zero because nominal interest and inflation are equal. A lender would have no net benefit from such a loan because inflation fully diminishes the value of the loan's profit.

simple discount note

Note in which the interest is deducted in advance from the amount of a loan before giving the balance to the borrower Simple discount note from the interest.

simple interest note

Note in which the interest on the face value of the loan is added to the loan and paid at maturity Simple interest note whick create new functions.

payer

Private or government organization that insures or pays for health care on behalf of beneficiaries Payer

proceeds

The amount payable by the insurance company, usually in at the insured's death or when the Proceeds policy matures

Federal Truth in Lending Act

The legislation requiring a disclosure statement informing a patient of a procedure's total cost, including finance charges,which is required when a patient will make more than four payments, is called Federal truth in Lending acT.

term of the note

The months or days form the date is issue to the day of maturity.The term of the note stated as a fraction of a year. It is common to use 360 days as a year Term of the note bond contract.

annual percentage rate

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing Annual pecentage ratE the federal truth in lact.

U.S Tresury bills

U bills

face value

Value of a bond, or other security as given on the certificate. Corporate bonds are usually issued with $1000 face values, municipal bonds with $5000 face values, and federal government bonds with $10,000 face values. Although the bonds fluctuate in price from the time they are issued until redemption, they are redeemed at maturity at their face value. The face value is the amount on which interest payments are calculated. Thus, a 10% bond with a face value of $1000 pays bondholders $100 per year. Face value is also referred to as Face Value.

bank discount

amount of interest deducted from the amount you wish to borrow. calculated by multiplying what you wish to borrow by the Bank discounT rate and the amount of time that the loan is in effect

true interest rate

annual percentage rate (APR) Face Rate - Amortization of Premium True interest rate.

stated rate

rate of cash interest per period stated in the bond contract Stated rate which the balance is settled.

discounting a note

receiving cash from selling a note to a bank before the due date of a note. Steps include: calculate maturity value, calculate number of days bank waits for money, calculate bank discount, calculate proceeds Discounting a Note that note is to the bank.

interest-in-advance notes

simple discount note Interest in advance notes that including finance

effective rate of interest

the annual rate of return that is actually earned (or charged) during the period the funds are held or borrowed Effective rate of interesT that proceeds to the rate.

maturity value

the full amount of money that must be repaid when the loan is due; that is, the principle plus the interest Maturity Value

discount period

time period in which a cash Discount perioD is available and the buyer can make a reduced payment.