Interest at maturity

IAM (interest at maturity) – 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:

• 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 discounted IAM interest paid on settlement date.

References

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