Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo

annuity
a stream of regular, periodic payments to be received or paid
annuity due
a stream of periodic payments in which the payment or receipt occurs at the beginning of each period
constant perpetuity
a stream of periodic payments that is expected to continue indefinitely with no change in the amount paid or received
discount rate
an interest rate used in time value of money calculations to determine present value; may derive from several sources, such as stated contract rates, costs to borrow, or expected rates of return on investments
effective interest rate
the interest rate that results when compounding occurs multiple times within a year; the true cost of borrowing
growing perpetuity
a stream of periodic payments that is expected to continue indefinitely with growth of the amount paid or received in the future, usually by a fixed percentage
loan amortization
the scheduling of periodic repayment of a debt, typically involving regular payments or receipts of amounts that include both interest payment and repayment of the principal of the amount owed
lump sum
a single cash payment made in lieu of a series of future payments, such as a lottery payout or a legal settlement
ordinary annuity
a stream of periodic payments in which the payment or receipt occurs at the end of each period
perpetuity
a stream of periodic payments that is expected to continue indefinitely
preferred stock
shares of ownership in a corporation that typically entitle the holder to a fixed dividend per share, if declared by the corporation, with priority over holders of that corporation’s common stock
required rate of return
the minimum amount of return that an investor will accept on an investment given the level of risk involved
retirement planning
the process of determining one’s objectives for retirement, including one’s finances, and developing strategies and tactics to achieve them
structured settlements
monetary legal settlements that are paid out in installments, such as an annuity, rather than a lump sum cash amount
Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters
Citation information

© Jan 8, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.