Scribe Post - 22.1-22.4

*This Scribe Post covers everything we learned last week (Sept 16th - 21st)


22.1

Bonds:
- Bonds always pay simple interest! A=P(1-rt)
- The Principal plus Interest is paid at the end of the maturity of the bond
*All risk goes to the buyer
- Inflation? Will the bond issuer be able to pay?

Need help understanding bonds? Check out this video!!




Add-On Loans:
- What is an Add-On loan?
An Add-On loan is a loan in which you, the borrower, pays back the Principal amount plus the Interest over a fixed period of time.
- Always use Simple Interest when working with add on loans!
- Formula for Add on Loans:
d = P(1+rt)/n
d = payment per interval

Discounted Loans:
- What is a Discounted loan?
A Discounted loan is a loan in which you, the borrower, pay interest upfront, and then eventually pay back the principal over time. In other words, I may want to borrow $100 with 6% interest; the lender would only hand me $94, which I would pay back over time ($94 = 6% of $100). Since I paid my interest up front ($6) I only receive the remaining principal ($94).
- Always use Simple Interest when working with Discounted Loans!
- To find the discounted loan:
1) find interest added onto original Principal
2) subtract interest from original Principal
= this will give you how much you are "handed" the day you get the loan
3) then divide this number by the number of payments you will be making


22.2 - 22.3

Credit Card Payments:
- Always use Compound Interest when working with Credit Card Payments
A = (P+i)^n
- Also know Savings Formula when working with Credit Card Payments
A = d[((1+i)^n-1) / n]


22.4

Amortizing:
- Formula:
A = d[ (1-(1+i)^-n) / n]
This formula is used when you need to find out how much to pay at each interval for a house that costs $x with y% interest over z years.

How to find APY:
- APY = i(n)
i = rate per compounding period
n = number of times compounded


Things to know:
- The definition of "bond"
- Simple Interest Formula & how and where to apply it
- Compound Interest formula & how and where to apply it
- The definition of "Add-On loan"
- The definition of "Discounted loan"
- The formula for amortizing (loan on a house)
- How to find APY