Copyright © 2008, The McGraw-Hill Companies, Inc.Index 661Piecework, 581
Plan documents, 307
Point-of-service (POS) plans, 540
Points, 443
Policy owner, 549
Policyholder, 523
Pork bellies, 275n
Portability, 311
Portfolio(s), 292; see also Investment portfolios
Portfolio manager, 295
Posting a margin, 279
Preferred-provider organization (PPO), 540–541
Preferred stock, 251
Preferred underwriting category, 550
Premium, 280, 523
Premium bond, 264
Premium tax, 319
Premiums, 531–532
Prepayment penalties, 184
Present value, 92, 94
Present value of annuity, 142–143, 168–177
annuity due, 169, 177
annuity factors, 169–171
formulas for, 171–172
loans and, 174–175
ordinary annuity, 168
other applications of, 176–177
table of annuity factors, 169–170
Present value annuity factor, 168, 173
Present value method, 564–570
cautions on use, 570
financial projections and, 565–566
more complicated projections, 568–569
net present value, 569
perpetuities, 566–568
Pretax deductions, 585
Previous close, 277
Previous settlement, 277
Price appreciation, 363
Price-to-book (PB) ratio, 513–514
Price-to-earnings (PE) ratio, 513–514
Pricing
depreciation, 362–370
markup and markdown, 332–337
profit margin, 343–347
series and trade discounts, 351–367
Principal, 3, 21, 57
balance principle, 21–22
finding, 21–24
Principal, interest, taxes, and insurance (PITI), 440
Principle of materiality, 128
Private companies, 255
Private mortgage insurance (PMI), 439
Proceeds, 57
Professional liability, 525
Profit margin, 343–347
defined, 343
gross profit margin, 343–344
markup based on selling price, 345–346
net profit margin, 344–345
real world applications of, 346–347
Profitability ratios, 508–509
Progressive tax rates, 386
Promissory notes, 31–39, 57, 263
date of, 31
defined, 31
face value of, 31
finding term from dates, 32–35
loan dates, 36
maturity date, 32, 36
maturity value, 32
multiple calendar years, 37–39
secondary sales of, 71–76Property, casualty, and liability insurance,
522–532
basic terminology of, 523–525
deductibles, coinsurance, and coverage limits,
529–530
insurance rates and underwriting, 527–529
law of large numbers and, 525–527
policy types, 524–525
premiums and, 531–533
Property, plant, and equipment, 500
Property taxes, 398–403, 437
assessed value, 398–400
calculating taxes due, 400–401
comparing tax rates, 402
setting tax rates, 401–402
special property tax rates, 402–403
Proportionate allocation of expenses, 345
Protectionist barriers, 407
Pure premium, 526
Put, 280Q
Qualification tests, 440
Quick ratio, 511–512R
Range, 627
Rate book, 528–529
Rate per hundred, 400–401
Rate per thousand, 401
Rate of return, 255
Rate of (straight-line) depreciation, 365
Rating agencies, 266
Rating classes, 527
Ratio tests, 440
Ratios; see Financial ratios
Real estate taxes, 398, 437
calculation of, 400–401
Real property taxes, 437
Reamortization, 435
Receivable, 67
Redemption value, 263
Reduced paid up (RPU) insurance, 553
Referral, 540
Refinancings/refinancing a loan, 186–188
Registered bonds, 263
Regulation Z, 119
Reinsurance, 527
Relative frequency, 622
Remaining balance of a loan, 185–186
Rent-to-own retailers, 454
Residual value, 365, 459
Retail foreign currency exchanges, 475–477
Retail method of inventory valuation, 598
Retail price, 333
Retained earnings, 500
Retirement plans and planning, 315–320, 585;
see also Inflation
annuities, 319–320
basic principles of, 306–312
defined benefit (DB) plans, 307–309
defined contribution (DC) plans, 307, 309
details of, 315–320
401(k)s, 317–319, 585
individual retirement accounts (IRAs), 316–317
other accounts, 320
projections in today’s dollars, 324–325
sinking funds and, 165–166
vesting, 309Return on assets (ROA), 509
Return on equity (ROE), 509
Reward credit cards, 427–428
Riders, 525
Risk, 258–259, 522–523
Rolled over (vested funds), 311
Roth, William, 316
Roth IRAs, 316, 319
Rounding, 6, 14, 128
foreign currencies, 472–473
in spreadsheets, 214–215
in tax rates, 401
Row, 209
Rule of 70, 95n
Rule of 72, 94–97, 255–256
finding rates by, 96–97
nonannual compounding and, 110
Rule of 78 loans, 450–451S
Safe haven, 292
Salary, 581
Salary plus commission, 584
Sales taxes, 377–381
calculation of, 378–379
price before tax, 379–380
sales tax tables, 380–381
Salvage value, 365
Savings bonds, 58, 268
Savings and loan, 9
Second mortgage, 434
Secondary sales, 71–73
with interest rates, 76, 81
promissory notes, 71–76
Secured loans, 419
Securities and Exchange Commission, 486
Self-employment tax, 393, 588
Self-insurance, 543
Seller’s premium, 343
Selling price, markup based on, 345–346
Semimonthly pay, 581
Series, 268
Series discounts, 354–355
Series EE bonds, 58
Series I savings bonds, 268
Series and trade discounts, 351–367
Service fee, 67
Severity of claim, 527
Share, 251
Shift differential, 583
Short position, 276
Sidereal year, 15n
Simple discount, 56–61, 64, 74
formula for, 59–61
rates in disguise, 66–67
simple interest vs., 63–67, 74
solving problems (examples), 59–60
Simple interest, 2–9
basic terminology, 2–4
impact of time, 7
interest rates as percents, 4
loans in disguise, 8–9
mixed number and fractional
percents, 6
notation for multiplication, 5
simple discount vs., 63–67
simple interest formula, 7–8
time value of money and, 2–4
working with percents, 4, 6
Simple interest formula, 7–8, 59
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