Interest at Maturity
Encyclopedia
IAM - usually loan
or deposit
given for special period of time with only two principal exchanges made at the settlement
and maturity dates. So there are only two associated cashflows
when notional is paid/received and one cashflow that refers to interest payment.
There are two subtypes of IAM deal:
The difference between simple IAM and discounted is only in date when interest payment made. Using simple IAM interest payment made on maturity date but using dicounted IAM interest paid on settlement date.
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
or deposit
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...
given for special period of time with only two principal exchanges made at the settlement
Value date
Value date in finance is the date when the value of an asset that fluctuates in price is determined. The value date is used when there is a possibility for discrepancies due to differences in the timing of asset valuation...
and maturity dates. So there are only two associated cashflows
Cash flow
Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.Cash flow...
when notional is paid/received and one cashflow that refers to interest payment.
There are two subtypes of IAM deal:
- Simple IAM (described above)
- Discounted IAM
The difference between simple IAM and discounted is only in date when interest payment made. Using simple IAM interest payment made on maturity date but using dicounted IAM interest paid on settlement date.