 # Loan Constant Home  Site Map  Add Term  Search  About Us  Contributors # Loan Constant

The yearly percentage of interest which remains the same over the life of an amortized loan, based on the monthly payment in relation to the principal originally loaned. For example: A \$1000 loan at 9% interest for 20 years can be amortized at \$9.00 per month. The constant interest rate is figured by finding one year's payments (\$9.00 x 12 months = \$108,00), and expressing this amount as a percentage of the principal originally borrowed (10.8% of \$1000).

Loan Constant

# Constant dollar plan

Constant dollar plan

A plan which enables investors to accumulate shares in a mutual fund by purchasing them on a regular basis (for example monthly) with a fixed dollar amount. The dollar amount buys more shares when the price is low than when it is high, and over time the investor will have accumulated shares at a cost which is neither high nor low, but average for the period in question. Hence the other name for this process - 'dollar cost averaging'. In the UK, the same principles apply to savings plans for unit trusts, and the process is called 'pound cost averaging'.

# Constant elasticity of substitution function

Constant elasticity of substitution function

See CES function

# Constant yield method

Constant yield method

Allocation of annual interest on a zero-coupon security for income tax use.

# Constant returns to scale

Constant returns to scale

A property of a production function such that scaling all inputs by any positive constant also scales output by the same constant. Such a function is also called homogeneous of degree one or linearly homogeneous. CRTS is a critical assumption of the H-O Model of international trade. Contrasts with increasing returns and decreasing returns.

# Constant dollars

Constant dollars

Dollars of a base year used as a general measure of purchasing power.

# Further Suggestions

Constant growth model
Constant dollars
Constant dollar plan
Constant prices
Constant ratio plan