Loan Constant

 

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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

Similar Matches

Constant dollars

Constant dollars

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


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 yield method

Constant yield method

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


Constant dollar plan

Constant dollar plan

Method of purchasing securities by investing a fixed amount of money at set intervals. The investor buys more shares when the price is low and fewer shares when the price is high, thus reducing the overall cost.


Constant ratio plan

Constant ratio plan

Maintaining a predetermined ratio between stock and fixed income investments through regular adjustments of distribution of funds into different investments. See: formula investing.


Further Suggestions

Constant prices
Constant dollars
Constant elasticity of substitution function
Constant growth model
Constant returns to scale


 
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