Three Methods Are Employed to Calculate Interest on Single-Payment Loans

question 160

True/False

Three methods are employed to calculate interest on single-payment loans: the declining balance method,the discount method,and the add-on interest method.

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Definitions:

Market Price

The ongoing rate at which a marketplace values the buying or selling of assets or services.

Face Value

The nominal value printed on a financial instrument, such as a bond or stock certificate.

Zero-Coupon Bond

A bond that does not pay interest during its life but is sold at a discount from its redemption value.

Interest Paid

The amount of money paid over a period for the use of borrowed funds.