Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 74

Take the case of an investor who makes an investment of $P for N periods. If interest is paid on a simple basis, then we can state the following.

 The interest that will be earned every period is a constant.

 In every period interest is computed and credited only on the original principal.

 No interest is payable on any interest that has been accumulated at an intermediate stage.

Let r be the quoted rate of interest per measurement period. Consider an investment of $P. It will grow to $P(1 + r) after one period. In the second period, if simple interest is being paid, then interest will be paid only on P and not on P(1 + r). Consequently, the accumulated value after two periods will be $P(1 + 2r). In general, if the investment is made for N periods, the terminal value of the original investment will be $P(1 + rN). N need not be an integer, that is, investments may be made for fractional periods.