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Q
uantitative
R
easoning &
P
roblem
S
olving
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© 2014 Pacific Crest
M
athematical Language
Terms and notation
accrue
— to accumulate over time
annuity
— an insurance product that produces a guaranteed regular income for retirement in return for
regular investments over your working life
certificate of deposit (CD)
— A bank savings account for a specific time (6 months, 2 years, 5
years, etc) that usually pays higher interest than a regular account, but which has a penalty for early
withdrawals. The interest rate is fixed for the life of the CD.
compound interest
— interest is paid both on the original investment and the interest as it accumulates
future value (FV)
— the value of an account at some specified time in the future that is equivalent in
value to a specific present amount
inflation
—The economic situation that results in increased costs of goods and service (and a decreased
purchasing power of your money). The inflation rate is usually expressed as a percent.
interest
— the cost of borrowing or the money earned on investments
interest rate
— the percent of the principal to be paid by the lender or borrower, usually stated as an
annual rate
net present value (NPV)
— the sum of the present values of payments you receive minus the present
value of your initial investment
present value (PV)
— the amount of money today that is equivalent to a payment or sequence of
payments to be received in the future
principal
— the amount of money borrowed or invested
Rule of 72
— a rule for computing how long it will take an investment to double simple interest —
interest is paid only on the original investment or loan (seldom, if ever, used in true investment or
loan situations)
I
nformation
What you need to know
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esources