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Discrete
| Term | Definition |
|---|---|
| Capital Gain | the amount of money one can earn by selling their assets |
| Hedging | the compromise between buyer and seller towards the price they will buy/sell a commody in the future |
| Total Rate of Return | total return on all investments, (capital gain + dividends) |
| Diversification | diversifying the assets you invest in |
| mutual fund | a pool of money from different investors |
| Call | and option type where the stock is prefered to increasing in price |
| put | an option type where the stock price is prefered to decrease |
| Short | A party obligated to sell the commoditie |
| Commodities | Goods bought and sold in bulk |
| Coupon Rate | Intrest rate for a bonds periodic interest payment |
| long | a party obligated to buy a commodity |
| Initial Margin | Money put upfront in buying a commodity |
| Compounding Frequency | The number of times interest is paid out in a given amount of time |
| simple interest | an interest charge that borrowers pay lenders |
| Rule of 72 | time it takes for money to double |
| Effective interest rates | takes into account the compounding period |
| Nomional rate | does not take into account the compounding period |
| Continous compounding | compounding and reinvesting interest over an infinite amount of periods |
| Law enforcing APY | Regulation Z |
| Annuity | the collection of equal payments made at regular time intervals |
| Present Value Annuity | A sum of money is payed upfront and the annuity payments and interest build to pay it off |
| Future Value Annuity | A sum of money totals by the annuity payments and interest over a given amount of time |
| Annuity Due | The annuity payments are made at the begining of each period |
| Annuity Ordinary | The annuity payments are made at the end of each period |
| Sinking Fund | Money set aside to pay of a debt or bond |
| Interest Rate | A percentage of the principle charged by the lender to use the money |
| Creditor | The person who lends the money |
| Principle | Amount borrowed or loaned |
| Debtor | Person who borrows money |
| term | the amount of time in which the loan is made |
| Promissary note | a written agreement setting the terms of a loan |