Loan Terminology and Amortization
Free SOA Exam FM (Financial Mathematics) lesson in Loans. 23 min read, ~3,435 words.
Loan equation:. Payment equals principal divided by the annuity factor. Outstanding balance: prospective or retrospective. Payment split:,. Total principal repaid; total interest. Principal grows at each period: early payments are mostly interest, later ones mostly principal. Crossover: principal first exceeds interest when, i.e., typically past the term's halfway point.
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 3a
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