IB Maths AI 1.4 Definitions
This page contains our IB Maths AI definitions for 1.4. By learning each one of these definitions, you will fully cover the content for IB Maths AI 'Interest'.
arithmetic series
The sum of the terms of an arithmetic sequence, used to total repeated equal increases over time in simple-interest contexts.
compounded
Describes interest that is repeatedly added to the balance at regular intervals, so future interest is calculated on both the original amount and previously added interest.
decay
A multiplicative decrease in a quantity over time; for a decrease of per period the multiplier is , giving a geometric pattern.
depreciation
A decrease in value over time; if the same percentage is lost each year, the values follow a geometric model with multiplier .
frequency
A table that shows how often each value (discrete) or each class interval (continuous) occurs.
geometric
Changing by a constant multiplier each step, so terms follow the form and match compound-interest and constant-percentage decrease models.
growth
The multiplicative change in a quantity over time; for an increase of per period the multiplier is , giving a geometric pattern.
inflation
A sustained rise in general price levels that reduces purchasing power, so real value compares an investment’s growth factor with the inflation growth factor.
interest
Money paid or earned for borrowing or investing; in sequence models it represents the change in an amount over time according to a fixed rule.
principal
The original amount borrowed (or the remaining loan balance) before interest is added; part of each payment reduces this amount.
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