CHAPTER 11 - SIMPLE INTEREST AND SIMPLE DISCOUNT
PROMISSORY NOTE
A LEGAL DOCUMENT PROMISING TO REPAY A LOAN
SIMPLE DISCOUNT NOTE
A LOAN MADE BY A BANK AT A SIMPLE INTEREST RATE WITH INTERST COLLECTED AT THE TIME THE LOAN IS MADE
THIRD-PARTY DISCOUNT NOTE
A NOTE THAT IS SOLD TO A THIRD PART (USUALLY A BANK) SO THAT THE ORIGINAL PAYEE GETS THE PROCEEDS IMMEDIATELY AND THE MAKER PAYS THE THIRD PARTY THE ORIGINAL AMOUNT AT MATURITY
INTEREST
AN AMOUNT PAID OR EARNED FOR THE USE OF MONEY
THIRD PARTY
AN INVESTMENT GROUP OF INDIVIDUAL THAT ASSUMES A NOTE THAT WAS MADE BETWEEN TWO OTHER PARTIES
UNDISCOUNTED NOTE
ANOTHER TERM FOR A SIMPLE INTEREST NOTE
U.S. RULE
ANY PARTIAL LOAN PAYMENT FIRST COVERS ANY INTEREST THAT HAS ACCUMULATED. THE REMAINDER OF THE PARTIAL PAYMENT REDUCES THE LOAN PRINCIPAL
ORDINARY INTEREST
ASSUMES 360DAYS PER YEAR
EXACT INTEREST
ASSUMES 365 DAYS PER YEAR
BANKER'S RULE
CALCULATING INTEREST ON A LOAN BASED ON ORDINARY INTEREST- WHICH YIELDS A SLIGHTLY HIGHER AMOUNT OF INTEREST
SIMPLE INTEREST
INTEREST PAID ON ONLY THE PRINCIPAL OF THE ORIGINAL LOAN OR INVESTMENT
MAKER
TH PERSON OR BUSINESS THAT BORROWS THE MONEY
EFFECTIVE INTEREST RATE OF A SIMPLE DISCOUNT NOTE
THE ACTUAL INTEREST RATE BASED ON THE PROCEEDS OF THE LOAN
FACE VALUE
THE AMOUNT BORROWED
PRINCIPAL
THE AMOUNT OF MONEY BORROWED OR INVESTED
DISCOUNT PERIOD
THE AMOUNT OF TIME THAT THE THIRD PARTY OWNS THE THIRD-PARTY DISCOUNTED NOTE
MATURITY DATE
THE DATE ON WHICH THE LOAN IS DUE TO BE REPAID
PROCEEDS
THE FACE VALUE OF THE LOAN MINUS THE BANK DISCOUNT
BANK DISCOUNT
THE INTEREST OR FEE ON A DISCOUNTED NOTE THAT IS SUBTRACTED FROM THE AMOUNT BORROWED AT THE TIME THE LOAN IS MADE
TERM
THE LENGTH F TIME FOR WHICH THE MONEY IS BORROWED
PRIME INTEREST RATE (PRIME), REFERENCE RATE OR BASE LENDING RATE
THE LOWEST RATE OF INTEREST CHARGED BY BANKS FOR SHORT-TERM LOANS TO THEIR MOST CREDITWORTHY CUSTOMERS
TIME
THE NUMBER OF DAYS, MONTHS, OR YEARS THAT THE MONEY IS BORROWED OR INVESTED
RATE
THE PERCENT OF THE PRINCIPAL PAID AS INTEREST PER TIME PERIOD
PAYEE
THE PERSON OR BUSINESS LOANING THE MONEY
ADJUSTED PRINCIPAL
THE REMAINING PRINCIPAL AFTER A PARTIAL PAYMENT HAS BEEN PROPERLY CREDITED
ADJUSTED BALANCE DUE AT MATURITY
THE REMAINING PRINCIPAL DUE AT MATURITY AFTER ONE OR MORE PARTIAL PAYMENTS HAVE BEEN MADE
MATURITY VALUE
THE TOTAL AMOUNT OF MONEY DUE AT THE END OF ALOAN PERIOD- THE AMOUNT OF THE LOAN AND THE INTEREST
EXACT TIME
TIME THAT IS BASED ON COUNTING THE EXACT NUMBER OF DAYS IN A TIME PERIOD