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Glossary | ||
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.. glossary:: | ||
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accumulation function | ||
A function that describes how much as single unit of currency grows over time. It is a special case of the amount function, where the amount invested is restricted to be one unit of currency. | ||
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amount function | ||
A function that describes how much an invested amount of money grows over time. | ||
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compound interest | ||
A geometric pattern of money growth in which interest earned is reinvested at the rate of interest. | ||
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discount | ||
The amount of money that must be paid up front on a loan. | ||
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effective rate of interest | ||
A measurement of money growth equal to the percentage change in the value of an investment between two time periods: | ||
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.. math:: | ||
i_{[t_1, t_2]} = \frac{a(t_2) - a(t_1)}{a(t_1)} | ||
growth | ||
The change in the value of money over time. | ||
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interest earned | ||
A measurement of money growth equal to the change in the value of an investment between two time periods: | ||
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.. math:: | ||
A_K(t_2) - A_K(t_1). | ||
principal | ||
(1) An initial investment of money. | ||
(2) The original amount of a loan that must be paid back. | ||
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simple interest | ||
A linear pattern of money growth in which interest earned is a fixed amount per time period. | ||
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