ACTL1101 Lecture Notes - Lecture 4: Actuarial Notation, Unsecured Debt, Compound Interest
Document Summary
Personal loan - usually with level repayments, " at" xed interest rates (3 to 5 years) Housing loan - level repayments of loan principal and interest (20 to 30 years), variable interest rates in australia, Exible repayments: fixed and oating interest securities (bonds) Repayments of interest (coupons) and face value on maturity. Interest rates maturity repayments (of capital and interest: interest is due at di erent frequencies during the year - monthly, quarterly, semi-annual or annual. The most powerful force in the universe is compound interest. Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn"t, pays it. Nominal interest rate: interest rates are normally quoted as per annum percentage nominal rates, number of periods, denoted by m, is also called the compounding frequency of the interest rate. E. g. m = 12 corresponding to monthly, m = 4 corresponding to quarterly: the nominal interest rate is.
