{"id":422,"date":"2020-04-27T16:07:27","date_gmt":"2020-04-27T20:07:27","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/?post_type=back-matter&p=422"},"modified":"2020-04-27T16:07:30","modified_gmt":"2020-04-27T20:07:30","slug":"glossary","status":"publish","type":"back-matter","link":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/back-matter\/glossary\/","title":{"raw":"Glossary","rendered":"Glossary"},"content":{"raw":"","rendered":"
\n
\u2013\u2013<\/dfn><\/dt>\n
\n

Double dash (double en dash) is used in this textbook to denote 'N\/A' or nothing needs to be entered.<\/p>\n<\/dd>\n

2ND<\/dfn><\/dt>\n
\n

The [2ND] function key (near the top left on the BAII Plus) allows the user to access the secondary menus. Example: [2ND][PMT] accesses the BGN menu.<\/p>\n<\/dd>\n

accelerated bi-weekly<\/dfn><\/dt>\n
\n

Take the monthly mortgage payment (P\/Y=12), and divide by 2, than make this payment bi-weekly.\u00a0 (P\/Y=26).\u00a0 This amounts to one extra monthly payment per year, which speeds up your mortgage repayment.<\/p>\n<\/dd>\n

Acid-test ratio<\/dfn><\/dt>\n
\n

Ratio of cash resources to the company's short-term debts.<\/p>\n<\/dd>\n

amortization<\/dfn><\/dt>\n
\n

The process of paying off debt through regular principal\u00a0and\u00a0interest payments over time.<\/p>\n<\/dd>\n

amortization period<\/dfn><\/dt>\n
\n

The total length of time until a loan is fully repaid.<\/p>\n<\/dd>\n

amortization table<\/dfn><\/dt>\n
\n

A table (or schedule) detailing the amount of principal and interest paid during each payment as well as the balance owing after each payment.<\/p>\n<\/dd>\n

AMRT<\/dfn><\/dt>\n
\n

Amortization menu in the BAII Plus. Hit 2ND PMT to access this menu.<\/p>\n<\/dd>\n

annuity<\/dfn><\/dt>\n
\n

A series of equal-sized payments, at regular intervals, over a fixed period of time.<\/p>\n<\/dd>\n

annuity due<\/dfn><\/dt>\n
\n

An annuity with deposits or payments at the beginning of the payment period.<\/p>\n<\/dd>\n

BGN<\/dfn><\/dt>\n
\n

The setting in the BAII Plus to turn on when payments occur at the beginning of the payment interval.<\/p>\n<\/dd>\n

bond holder<\/dfn><\/dt>\n
<\/dd>\n
Canada Education Savings Grant (CESG)<\/dfn><\/dt>\n
\n

The CESG provides 20% of the Registered Education Savings Plan (RESP) contributions of up to $2,500. That means the CESG can add a maximum of $500 to an RESP each year.<\/p>\n<\/dd>\n

Compound interest<\/dfn><\/dt>\n
\n

interest paid on previously earned interest as well as on the original principal.<\/p>\n<\/dd>\n

contribution margin<\/dfn><\/dt>\n
\n

Markup in dollars for one item<\/p>\n<\/dd>\n

cost of financing<\/dfn><\/dt>\n
\n

The amount of interest we must repay on the loan.<\/p>\n<\/dd>\n

Cost of the Goods Sold (COGS)<\/dfn><\/dt>\n
\n

Total Variable expenses, or all the costs that go into making your item.<\/p>\n<\/dd>\n

coupon payment<\/dfn><\/dt>\n
\n

The regular (usually semi-annual) payment from a coupon bond.<\/p>\n<\/dd>\n

coupon rate<\/dfn><\/dt>\n
\n

In a bond, this is the initial interest rate used to calculate the coupon payment<\/p>\n<\/dd>\n

CPT<\/dfn><\/dt>\n
\n

Compute key on BAII Plus. Computes selected value.<\/p>\n<\/dd>\n

defaults<\/dfn><\/dt>\n
\n

To default on a loan is to fail to make the payments.\u00a0 This can lead to fines, legal procedures, or items being repossessed.<\/p>\n<\/dd>\n

deferred annuities<\/dfn><\/dt>\n
\n

An annuity where the regular payments are delayed for a period of time.<\/p>\n<\/dd>\n

Dividend<\/dfn><\/dt>\n
\n

The regular payment (PMT) paid by the issuer of the preferred share.<\/p>\n<\/dd>\n

down payment<\/dfn><\/dt>\n
\n

A lump-sum payment made before you take out a loan.<\/p>\n<\/dd>\n

effective rate<\/dfn><\/dt>\n
\n

The equivalent rate compunded annually<\/p>\n<\/dd>\n

END<\/dfn><\/dt>\n
\n

The setting in the BAII Plus to make the payments occur at the end of the payment interval.<\/p>\n<\/dd>\n

ENTER<\/dfn><\/dt>\n
\n

The [ENTER] key (top left on the BAII Plus) is used to set values within the calculator's menus.<\/p>\n<\/dd>\n

Equivalent<\/dfn><\/dt>\n
\n

This is a mathematical term, meaning that two things are the same in the ways we want them to.\u00a0 In the case of interest rates, two rates are equivalent if an investment at each rate gives the same Future Value after one year.<\/p>\n<\/dd>\n

Equivalent Uniform Annual Cost (EUAC)<\/dfn><\/dt>\n
\n

The Payment of an Ordinary Annuity with PV = NPV<\/p>\n<\/dd>\n

Expense<\/dfn><\/dt>\n
\n

A cost, either fixed or variable, Money Out<\/p>\n<\/dd>\n

face value<\/dfn><\/dt>\n
\n

In a bond, this is the original purchase price, as well as final payment for the bond.<\/p>\n<\/dd>\n

fair market value<\/dfn><\/dt>\n
\n

How much an item would sell for on the open market - normally, this is the PV according to today's interest rates for similar investments.<\/p>\n<\/dd>\n

fair market value of a bond<\/dfn><\/dt>\n
\n

The amount the purchaser (secondary bond holder) is willing to pay for a bond.<\/p>\n<\/dd>\n

fixed cost<\/dfn><\/dt>\n
\n

Also can be known as the Operations Costs or Operating Expenses.\u00a0 Stay the same no matter how may units are sold.<\/p>\n<\/dd>\n

fixed interest rate<\/dfn><\/dt>\n
\n

An interest rate which remains constant through the entire term, instead of fluctuating based on market conditions.<\/p>\n<\/dd>\n

fixed rate mortgage<\/dfn><\/dt>\n
\n

A mortgage where the interest rate charged remains fixed for the duration of the mortgage term.<\/p>\n<\/dd>\n

FOCAL DATE<\/dfn><\/dt>\n
\n

The date at which we make the calcualtions.... (FIX)<\/p>\n<\/dd>\n

general annuity<\/dfn><\/dt>\n
\n

An Annuity where P\/Y \u2260 C\/Y<\/p>\n<\/dd>\n

Gross Profit (GP)<\/dfn><\/dt>\n
\n

Revenue minus Cost of Goods (or Variable expenses) only.\u00a0 The Operating expenses or Fixed Costs are not considered.<\/p>\n<\/dd>\n

interest<\/dfn><\/dt>\n
\n

Money earned on an investment, or paid on a loan.<\/p>\n<\/dd>\n

internal rate of return (IRR)<\/dfn><\/dt>\n
\n

The rate for which the NPV = 0<\/p>\n<\/dd>\n

issuer<\/dfn><\/dt>\n
<\/dd>\n
lease payments<\/dfn><\/dt>\n
\n

Equal sized payments for a lease.<\/p>\n<\/dd>\n

lease period<\/dfn><\/dt>\n
\n

Duration of a lease (fixed time period).<\/p>\n<\/dd>\n

lessee<\/dfn><\/dt>\n
\n

Person or company holding the lease. Example: person who is leasing a car.<\/p>\n<\/dd>\n

loan<\/dfn><\/dt>\n
\n

An annuity where we borrow an initial amount of money (PV) and we repay the loan with a series of equal-sized payments (PMT), at regular intervals, over the course of a fixed time period<\/p>\n<\/dd>\n

Market Rate<\/dfn><\/dt>\n
\n

The current interest rate.<\/p>\n<\/dd>\n

markup<\/dfn><\/dt>\n
<\/dd>\n
maturity date<\/dfn><\/dt>\n
\n

The termination or ending date for which a loan, bond, or any amount borrowed must be paid back in full.<\/p>\n<\/dd>\n

method of substitution<\/dfn><\/dt>\n
\n

A method of solving a system of equations.<\/p>\n<\/dd>\n

minimum acceptable rate of return (MARR)<\/dfn><\/dt>\n
<\/dd>\n
mortgage term<\/dfn><\/dt>\n
\n

The length of time your mortgage agreement and interest rate will be in effect.<\/p>\n<\/dd>\n

Net Present Value (NPV)<\/dfn><\/dt>\n
\n

The sum of all Inflows, minus all Outflows, adjusted for time.<\/p>\n<\/dd>\n

Nominal rate<\/dfn><\/dt>\n
\n

Percent annual rate in compound interest.<\/p>\n<\/dd>\n

Operating expenses<\/dfn><\/dt>\n
\n

Fixed Costs<\/p>\n<\/dd>\n

ordinary annuity<\/dfn><\/dt>\n
\n

An annuity where the payments occur at the end of each payment interval.<\/p>\n<\/dd>\n

ordinary perpetuity<\/dfn><\/dt>\n
\n

A perpetuity where the first payment comes at the end<\/em> of the first period<\/p>\n<\/dd>\n

partial payment<\/dfn><\/dt>\n
<\/dd>\n
percent gross margin<\/dfn><\/dt>\n
<\/dd>\n
Percent Markup<\/dfn><\/dt>\n
\n

The ratio of Profit over Cost, (usually Gross Profit).<\/p>\n

 <\/p>\n<\/dd>\n

percent net margin<\/dfn><\/dt>\n
<\/dd>\n
Periodic rate<\/dfn><\/dt>\n
\n

Periodic Compound interest rate<\/p>\n<\/dd>\n

perpetuity<\/dfn><\/dt>\n
\n

An annuity that has no end or an annuity with regular cash flows that continue forever.<\/p>\n<\/dd>\n

perpetuity due<\/dfn><\/dt>\n
\n

A perpetuity<\/a> where the first payment is at the beginning<\/em> of the first period.<\/p>\n<\/dd>\n

PMT<\/dfn><\/dt>\n
\n

The 'payment' key within the TVM (time value of money keys) in the BAII Plus Calculator.<\/p>\n<\/dd>\n

preferred share<\/dfn><\/dt>\n
\n

A preferred share has no maturity date (no expiration date or fixed term) but will stop regular payments if the company stops making a profit of goes out of business. Because we have no way of knowing when this might happen, we treat preferred shares like perpetuities and assume the profits will continue infinitely (forever).<\/p>\n<\/dd>\n

Price<\/dfn><\/dt>\n
\n

The selling price, fair market value or the amount the purchaser is willing to pay.<\/p>\n<\/dd>\n

principal<\/dfn><\/dt>\n
\n

The original amount of money invested or borrowed.<\/p>\n<\/dd>\n

Profit<\/dfn><\/dt>\n
\n

The difference between the revenues (sales) and expenses (cost of goods and operating costs).<\/p>\n<\/dd>\n

renew<\/dfn><\/dt>\n
\n

A new mortgage is drawn up at the end of each term when a mortgage holder (buyer) renews their mortgage.<\/p>\n<\/dd>\n

residual value<\/dfn><\/dt>\n
\n

Size of final lease payment required. Example: final payment required to own a car at the end of the car lease.<\/p>\n<\/dd>\n

RESP<\/dfn><\/dt>\n
\n

Registered Education Savings Plan<\/p>\n<\/dd>\n

return on investment (ROI)<\/dfn><\/dt>\n
<\/dd>\n
revenue function<\/dfn><\/dt>\n
<\/dd>\n
RRSP<\/dfn><\/dt>\n
\n

Registered Retirement Savings Plan<\/p>\n<\/dd>\n

secondary bond holder<\/dfn><\/dt>\n
\n

A bond holder who has purchased a bond(s) from either the original bond holder or another secondary bond holder.<\/p>\n<\/dd>\n

Sells at a Discount<\/dfn><\/dt>\n
\n

Sells for a price lower than the original purchase price.<\/p>\n<\/dd>\n

Sells at a Premium<\/dfn><\/dt>\n
\n

Sells for a higher selling price than the original purchase price.<\/p>\n<\/dd>\n

Semi-annual payments<\/dfn><\/dt>\n
\n

Payments that occur twice per year or once every six months.<\/p>\n<\/dd>\n

simple annuity<\/dfn><\/dt>\n
\n

An annuity where the payment frequency (P\/Y) is equal to the compounding frequency (C\/Y).<\/p>\n<\/dd>\n

simple interest<\/dfn><\/dt>\n
\n

Interest earned without any compounding, that is interest paid only on the principal.<\/p>\n<\/dd>\n

system of equations<\/dfn><\/dt>\n
\n

A number of equations, involving the same variables<\/p>\n<\/dd>\n

term of a bond<\/dfn><\/dt>\n
\n

The amount of time between when the bond is issued and when the bond matures.<\/p>\n<\/dd>\n

Turnover Ratio<\/dfn><\/dt>\n
\n

The value of goods sold divided by the average value of goods in stock<\/p>\n<\/dd>\n

TVM keys<\/dfn><\/dt>\n
\n

Time Value of Money keys. These are the N, I\/Y, PV, PMT and FV keys on the BAII Plus.<\/p>\n<\/dd>\n

variable cost<\/dfn><\/dt>\n
\n

Costs that vary based on how many items are made and sold.<\/p>\n<\/dd>\n

variable rate<\/dfn><\/dt>\n
<\/dd>\n
variable rate mortgage<\/dfn><\/dt>\n
\n

the interest rate varies throughout the mortgage term<\/p>\n<\/dd>\n<\/dl>\n","protected":false},"author":883,"menu_order":1,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"back-matter-type":[37],"contributor":[],"license":[],"class_list":["post-422","back-matter","type-back-matter","status-publish","hentry","back-matter-type-glossary"],"_links":{"self":[{"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter\/422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter"}],"about":[{"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/wp\/v2\/types\/back-matter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/wp\/v2\/users\/883"}],"version-history":[{"count":1,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter\/422\/revisions"}],"predecessor-version":[{"id":423,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter\/422\/revisions\/423"}],"metadata":[{"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter\/422\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/wp\/v2\/media?parent=422"}],"wp:term":[{"taxonomy":"back-matter-type","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/pressbooks\/v2\/back-matter-type?post=422"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/wp\/v2\/contributor?post=422"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/wp-json\/wp\/v2\/license?post=422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}