Vocabulary

amortization

process of spreading or allocating a cost or payment over a period of time

annuity

fixed regular payment stream paid in the same amount every period for a period of time

bond

long-term liability often issued by corporations, governments and nonprofit organizations

carrying amount

face amount of a bond less unamortized discount or plus unamortized premium

contract rate

for bonds, rate of interest to be paid at fixed intervals

face amount

actual amount stated on a bond or note that reflects the principal amount borrowed

future value

value a sum of money will be worth at a future point in time, given the effects of interest

installment note

long-term liability that is to be paid in set payments at specific points in time

interest rate

percentage of principal that reflects the cost of borrowing money, usually expressed in annual terms

market rate of interest

going or comparative interest rate for similar investments or loans

ordinary annuity

annuity payment that occurs at the end of each period

present value

amount a sum of money is worth in the present

sell at a discount

selling a bond with a stated rate that is lower than market rate, resulting in a bond sale price below face value

selling at a premium

selling a bond at a higher market price than its face amount