MA170 Study Guide - Midterm Guide: Promissory Note, Natural Number, Nominal Interest Rate
Document Summary
This principal p is called the present value of s. This is the so-called "banker"s 360 rule" (a "standard" us and international practice) where 1 year = 360 days: variable interest rates: there are some real-life situations when the interest rate changes over a period of time. Examples: suppose that the time period consists of two adjacent periods having different interest rates: the rate r1 is valid for period [0, t1] and the rate r2 is valid for period. The borrower may repay any portion of the (outstanding) loan at any time without interest penalty. Interest is calculated on the unpaid balance and payable usually monthly. Hence, the note may be interest-bearing or non-interest bearing. A promissory note may be sold before its due date. The face value of the note is the principal amount being loaned. Canadian law adds three days of grace to the term of the note to obtain the legal due date, or the "maturity date"
