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Terminology

Amortisation - This is the term given to the process of paying back loans.

Annuity - This is just a series of constant cash payments made over a continuous period. For example, a car loan or a mortgage is an annuity.

A series of equal payments if often called an ordinary annuity.

Rate - This refers to the interest rate and is usually expressed an an annual interest rate

Basic Financial Functions

There are 5 basic financial functions and these refer to circumstances when you have a fixed rate of interest throughout a period of time.

Positive or Negative

Money that is paid to you is positive

Money that is deposited or is spent by you in negative.

Cross Checking

You can easily check you have the correct answer in your calculations by cross checking

SS example