ECON 310 Chapter Notes - Chapter 4: Real Interest Rate, Fisher Equation, Interest

• School: U of M
• Department: Economics
• Course: ECON 310
• Professor: Chad Hogan

Document Summary

Present value/present discounted value - one dollar paid to you one year from now is worth less than a dollar paid to you today. Simple loan - the lender provides the borrower with an amount of funds (principal) that must be repaid to the lender at the maturity date, along with an additional payment of interest. Simple interest rate = interest payment/amount of the loan. Discounting the future - calculating today"s value of dollars received in the future (1+)^ Simple loan - principal is repaid at the maturity date with interest. Fixed-payment loan (fully amortized loan) - they repay a combination of the principal and the interest every period. Coupon bond - fixed interest payment (coupon) every year until the maturity date, when the specified (face value or par value) is repaid a. b. c. d. The corporation or government agency that issues the bond.