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- Title
A Note on the Cost of Fractional Premiums.
- Authors
Belth, Joseph M.
- Abstract
This article presents several methods by which annual percentage rates for fractional premiums may be approximated without using a computer or elaborate tables. The maximum yield method assumes that all installment payments are applied entirely to principal until it is paid off, after which they are applied entirely to interest. Minimum yield method on the other hand, assumes that all installment payments are applied entirely to interest until it is paid off, after which they are applied entirely to principal. Another one is the direct ratio method, which assumes that the interest element of each installment declines in accordance with the sum of the digits.
- Subjects
INSURANCE premiums; INSURANCE rates; INTEREST (Finance); FINANCE charges; INSTALLMENT plan; INSURANCE
- Publication
Journal of Risk & Insurance, 1978, Vol 45, Issue 4, p683
- ISSN
0022-4367
- Publication type
Article
- DOI
10.2307/252251