658 IndexConsolidation of loans, 186–188
Consumer mathematics
credit cards, 419–428
installment plans, 449–455
leasing, 458–463
mortgages, 433–444
Consumption tax, 377
Continuous compounding, 106–108
Contributed capital, 500
Convenience users, 424
Conventional loan, 436
Conversion ratios, 510–511
Converting the percent to a decimal, 4
Cooperative insurers, 524
Copayments, 540
Corporation, 251
Cost, 333
Cost basis, 598
of inventory, 598–599
Cost of goods sold, 487, 489
calculation of, 597–598
Coupon bonds, 263
Coupon rate, 263
Coverage limits, 529, 531–532
Covered events, 523
Covered risks, 523
Credibility table, 542
Credit card interest, 423–424
Credit cards, 419–428
average daily balance (ADB), 420–423
basics of, 419
calculating interest on, 420–424
choosing the best deal, 425–427
grace period, 424
other fees/expenses, 425
reward cards, 427–428
travel and entertainment cards, 420
Credit risk, 266
Credit sales, 355
Credit union, 9
Cross rates, 474–475
Currency conversion, 468–473
cross rates, 474–475
foreign currency to US$, 472
retail rate conversions, 475
US to foreign currency, 471–472
Current assets/liabilities, 500
Current dividend yield, 254
Current ratio, 511–512
Current yield of a bond, 264–265
Customs, 407D
Date, 31
Day of the Year Table, 33–34
Death benefit, 549
Debit cards, 419–420
Debt service, 269
Debt-to-equity ratio, 512
Debtor, 4
Declaring a dividend, 252
Declining balance depreciation, 363, 365
Deductibles, 529, 531–532, 538
Deferred annuity, 319
Defined benefit (DB) plans, 307–309
defined contribution (DC) plans vs., 311–312
Defined contribution (DC) plans, 309
defined benefit (DB) plans vs., 311–312
Deflation, 322
Delivery date, 275
Demand accounts, 9Demutualization, 524
Dental insurance, 585
Department of Veterans Affairs (VA), 436
Depreciated value, 365
Depreciation, 362–370, 490, 501
accounting principles of, 369
declining balance depreciation, 365
MACRS and other models, 369–370
partial year depreciation, 368
as percent, 363–369
percent vs. straight-line, 366–369
straight-line, 365–366
Depreciation rate, 365
Deviations, 627
Differential pay scale, 583
Disability insurance, 585
Discount(s), 57, 66; see also Simple discount
calculation of, 59
cash discounts, 355–357
concept of, 56–57
series discounts, 354–355
trade discounts, 351–354
Discount bond, 264
Discount loan, 57
Discount note, 58, 65
Discount period, 355–356
Discount the receivable, 67
Dispersion, measures of, 627
Diversification, 290–292
Diversified portfolio, 292
Dividend(s), 252–253, 524
Dividend reinvestment plans, 257, 296
Dividend yields, 253–255
Double taxation, 393
Dow Jones Industrial Average, 283
Down payment, 441
Draw (commission), 584
Dread disease policies, 525
Dumping goods, 407
Duties, 407E
Earnings before interest and taxes (EBIT), 490
Earnings per share (EPS), 513
Effective annual rate, 119
Effective interest rates, 114–122
comparing interest rates, 114–116, 118
converting to nominal rates, 132
definitions for, 116
formula for, 117–118
growth rate/compound growth, 121–122
for nominal rate, 116–117
nominal rates vs., 127–129
nonstandard terms, 120–121
Truth in Lending Act and, 119
use of, 120
Effective rate, 119
Effective rate formula, 118
Effective yield, 119
Effectiveness ratios, 509–510
Empirical Rule, 630
Employee benefits
cafeteria plans, 546
flexible spending accounts, 545
health insurance, 543–545
other group plans, 545–546
Employer payroll taxes, 587–588
Equities; see Stock(s)
Equity, 434, 500
Equity funds, 296
Equivalent annual rate (EAR), 116, 119Equivalent simple interest rate, for discount
note, 65
Escrow, 438
Estate, 408
Estate taxes, 408–410
European-style option, 280n
Exact interest, 16
Exact method, 15–16
Exchange rates, 469; see also Currency conversion
forward rates, 473–474
as a percentage, 477–478
Exchanges, 276
Excise taxes, 406–407
Executor/executrix, 408
Exercising the option, 280
Expected claims cost, 526n
Expected frequency, 622–623
Expected relative frequency, 622
Expected value, 622–623
Expense allocation, 345
Expense ratio, 296
Expenses, 487, 490
Experience rating, 541
Exponents, 91
Extended term coverage, 553F
Face value, 31, 57–58, 263
Fair Labor Standards Act, 582
Family policy, 539
Federal Housing Administration (FHA), 436
Federal Insurance Contributions Act (FICA),
392–393, 585, 587
FIFO (first in, first out), 594–595
Finance charge, 449
Financial projections, 565
present values and, 565–566
Financial ratios, 507–514
balance sheet ratios, 511–512
income ratios, 508–511
valuation ratios, 512–514
Financial statements
balance sheets, 498–504
income statements, 486–494
others, 504
Fire insurance, 525
First mortgage, 434
First-to-die policy, 557
529 plans, 586
Fixed currencies, 470
Fixed income, 293
Fixed income funds, 296
Fixed loan, 436–437
Fixed mortgage, 435
Fixed-payment installment, 449
Fixed-rate mortgage, 435
Flat tax rate, 386
Flexible spending accounts (FSAs), 545, 585
Floating rates, 470
Foreclosure, 433
Foreign currency exchanges, 475–477
Foreign price competition, 407
Format (of cell), 209
Forward rates, 473–474
401(k) plans, 317–319, 585
403(b) plans, 319
Fractional percents, 6
Fraternal companies, 524
Frequency, 622
Frequency of claim, 527
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