Finance, or financial management, requires the knowledge and precise use of the language of the field.

Match the terms relating to the basic terminology and concepts of the time value of money on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term.

Term	Answer		Description
Discounting		A.	A schedule or table that reports the amount of principal and the amount of interest that make up each payment made to repay a loan by the end of its regular term.
Time value of money		B.	A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal.
Amortized loan		C.	A value that represents the interest paid by borrowers or earned by lenders, expressed as a percentage of the amount borrowed or invested over a 12-month period.
Ordinary annuity		D.	The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future.
Annual percentage rate		E.	The name given to the amount to which a cash flow, or a series of cash flows, will grow over a given period of time when compounded at a given rate of interest.
Annuity due		F.	A 6% return that you could have earned if you had made a particular investment.
Perpetuity		G.	A concept that maintains that the owner of a cash flow will value it differently, depending on when it occurs.
Future value		H.	A series of equal cash flows that occur at the beginning of each of the equally spaced intervals (such as daily, monthly, quarterly, and so on).
Amortization schedule		I.	A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever.
Opportunity cost of funds		J.	A cash flow stream that is created by an investment or loan that requires its cash flows to take place on the last day of each quarter and requires that it last for 10 years.

Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the present value of an annuity due?

PMT x {[(1 + r)nn 1]/r} x (1 + r)

PMT x ({1 [1/(1 + r)nn]}/r)

PMT/r

PMT x ({1 [1/(1 + r)nn]}/r) x (1 + r)