Key Terms for Chapter 10

Question	Answer
Adjusted Balance	The balance after partial payment less interest is subtracted from the principal
Banker's Rule	Time is exact days/360 in calculating simple interest
Exact Interest	Calculating simple interest using 365 days per year in time
Interest	Principal x Rate x Time
Maturity Value	Principal plus interest (if interest is charged). Represents amount due on the due date
Ordinary Interest	Calculating simple interest using 360 days per year in time I = P x R x T
Principal	Amount of money that is originally borrowed, loaned, or deposited
Simple Interest	Interest is only calculated on the principal. In P x R x T, the interest plus original principal equals the maturity value of an interest-bearing note
Simple Interest Formula	Simple Interest (I) = Principal (P) x Rate (R) x Time (T)
Time	Expressed as years or fractional years, used to calculate simple interest
U.S. Rule	Method that allows the borrower to receive proper interest credits when paying off a loan in more than one payment before the maturity date

Resource summary

	Created by Laura Samuelson 3 months ago