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This is an old revision of this page, as edited by Gregalton (talk | contribs) at 20:58, 15 February 2007 (→Re compound interest (comments on my user page reply)). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

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 Joe  I 03:13, 20 January 2007 (UTC)

Re compound interest (comments on my user page reply)

Please, don't worry - I didn't consider this trashing the page and it is not, at any rate, "mine". In this case, I simply thought the text did not have much to do with interest per se. It also seemed to me that the source was perhaps not sufficiently reliable, but that is just an opinion. As for other suggestions, please go ahead and be bold and edit.

That said, I disagree about compound interest - it is the norm as far as I am aware, and I haven't seen any references to the contrary. You may want to see the interest page, there is more background there I believe.--Gregalton 12:30, 26 January 2007 (UTC)

I'm not sure if this is the right way to reply, or if I need to go to your user page, but I'll try here. Please let me know if this works.

I looked into the simple vs compound stuff a bit more. US Savings Bonds pay simple interest -- see www.treasurydirect.gov. Actually all US government bills, notes, bonds etc. pay simple interest. Since there's a wide market for T-Bills, T-Bonds, etc., the market price is apparently based on projected yield, but it's not clear that this is a compound yield. "Yield to Maturity" (YTM) doesn't seem to be a compound yield calculation. Interest accrues on these securities, but I don't see any interest paid on the accrued interest.

I come at this from an accounting/legal perspective, not a high-finance perspective. Cash is an asset. Land is an asset. Renting out land is no different from lending cash; and, taking out a rent on land is no different from borrowing cash. It's a contract. Unless the contract explicitly stipulates a penalty for late payment or non-payment of rent/interest, the interpretation of contract non-compliance is up to the courts. Courts in the USA generally assume that the delay of rental/interest income to the lender should be compounded -- on the basis that the lender could've invested the rental/interest income elsewhere to earn further rental/interest income during the time delay. Courts in other countries do not assume compounding of debt if it wasn't in the contract. They work from the premise that a contract is a contract: if penalties for non-compliance are not in the contract, the contract is explicitly for the amounts stated.

The history of this fascinates me, but more to the point for current Misplaced Pages readers, I think that the interest-related articles should talk about simple interest before getting into compound interest. Just my opinion.

Thank you for being a gentleman, Gregalton! :-) I don't pretend to know everything about this subject of "interest" (compound or simple), but I want to understand and share as best I can. Thanks for your encouragement!

SueHay 04:01, 27 January 2007 (UTC)

Apologies, I didn't see your reply until just now, when I came on a different subject. You're right, in a sense at least, that bonds do effectively pay simple interest - I hadn't looked at it that way. (The usual economics assumption is that the funds will be reinvested, but that brings in other issues). So there is scope to include references to simple interest.

I actually came to your page to compliment your flagging a page on return as inappropriate and unsourced. I've been following a number of pages here which I think are equally opinionated, but, without naming names, I seem to have offended someone and cannot get any reasonable answers or responses (let alone sourcing materials or backing up arguments). I've mostly been backing off (well, at least a bit) and hoping that it would calm down, but so far, my hopes have been unfounded. If you could look at other pages it would help remove it from a silly two-way slinging match. (I'll admit I am also aware I have perhaps also reacted quickly sometimes rather than waiting...). The one right now that is particularly annoying is nominal interest rate, where the approach has now deteriorated to one of destructive (IMHO) redirects without any attempt to explain or discuss.

Anyway, your continued reasoned work is appreciated. Good faith approach work is the key;) .--Gregalton 20:58, 15 February 2007 (UTC)

Filmogs

		The Working Man's Barnstar
		Nice work on reversing those filmographies! 82.9.25.163 14:04, 11 February 2007 (UTC)