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Interest on interest

Business Interest incomeInterest rate cap

INTEREST ON INTEREST - Interest earned on reinvestment of each interest payment on money invested. See:...
INTEREST ONLY - Is a security whose value is predicated on a discounted interest rate structure. Typica...

 


Interest on interest. For example, if $1,000 is deposited in an account earning interest of 6% per year the account will earn $60 in the first year. In year two the account balance will earn $63.60 (not $60.00) because 6% interest is earned on $1,060.

Earning interest on interest, i.e. further increasing the value of an investment by reinvesting the income from it, which in turn generates income because it has not been distributed.
Convertible bond ...

Interest on interest
Interest on Lawyer Account
Interest on lawyer trust accounts
Interest on Lawyers' Trust Accounts
Interest on Trust Accounts
Interest Only
Interest Only (IO) Strips
Interest only loan
Interest only loan ...

Compound interest is interest on interest. The more frequent the compounding, the higher the interest.
Interest earned or paid for 1 year on $10,000 at a 6% nominal rate
Compounding ...

time during which compound interest is computed. Compounding means interest on interest and the period can be on a daily, monthly, annual, or other basis.

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Interest that is due only at the maturity date rather than periodically over the life of the loan.
Interest on interest
Interest earned on reinvestment of each interest payment on money invested. See: compound interest.
Interest-only loan ...

In performance measurement, the actual rate of return realized over some evaluation period. In fixed income analysis, the potential return that considers all three sources of return (coupon interest, interest on interest, and any capital gain/loss) ...

A yield based on the assumption that the security remains outstanding to maturity. It represents the total of coupon payments until maturity, plus interest on interest, and whatever gain or loss is realized from the security at maturity.

Compound interest The effect of interest on interest. Assuming interest is re-invested total returns include interest on that interest....

The yield from a bond is made up of three components: coupon interest, capital gains and interest on interest (if a bond pays no coupon interest, the only yield will be capital gains).

In fixed income analysis, the potential return that considers all three sources of return (coupon interest, interest on interest, and any capital gain/loss) over some i nvestment horizon.

See also: Compound interest, Net present value, Internal rate of return, Required return, Expense

Business Interest incomeInterest rate cap

 
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