Loan and Rounding: Difference between pages

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''Lending - borrowing.''
Rounding is a reduction in the accuracy to which numbers are displayed, in order to make them easier to understand.


A loan is an arrangement for lending and borrowing, most commonly of money.
Excel has an Advanced option whether to calculate to full accuracy, or only to the displayed accuracy.


A loan is a borrowing (liability) for the borrower, and an investment (asset) for the lender.




In the commercial context loan arrangements are legally enforceable and normally formalised in a loan agreement.
== Round don't truncate ==
It's better practice to figures for presentation, rather than truncating them.
For example:
1.0049988 is expressed to 7 decimal places.
 
Rounding 1.0049988 off to fewer than 7 decimal places, it becomes:
*1.004999 to 6 decimal places (NOT 1.004998)
*1.00500 to 5 decimal places (not 1.00499)
*1.0050 to 4 decimal places (not 1.0049)
*1.005 to 3 decimal places (not 1.004)
 
If you truncate a final result instead of rounding it, it is not a strictly correct presentation.
It's also important not to truncate the results of intermediate workings.
 
Doing that introduces errors into your final results.
 
 
 
== Rounding errors ==
Even rounding correctly in intermediate workings introduces errors in final results.
 
The only way to avoid rounding errors is to keep full accuracy in the intermediate workings.




== See also ==
== See also ==
* [[Advance]]
* [[Excel]]
* [[An introduction to loan finance]]
* [[CertFMM]]
* [[Asia Pacific Loan Market Association]]
* [[Assets]]
* [[Back-to-back loan]]
* [[Bond]]
* [[Borrower]]
* [[Borrowing]]
* [[Bridging loan]]
* [[Climate loan]]
* [[Cost-plus loan pricing]]
* [[Debt]]
* [[Federal Home Loan Mortgage Corporation]]
* [[Finance]]
* [[Green loan]]
* [[Green Loan Principles]]
* [[Impaired loan]]
* [[Lender]]
* [[Liabilities]]
* [[Loan against inventory]]
* [[Loan against receivables]]
* [[Loan agreement]]
* [[Loan market]]
* [[Loan Market Association]]  (LMA)
* [[Loan relationship]]
* [[Loan Syndications & Trading Association]]
* [[Loan transferability]]
* [[Loans and receivables]]
* [[Non-performing loan]]
* [[Overdraft]]
* [[Revolving loan]]
* [[Self-financing loan]]
* [[Social loan]]
* [[Social Loan Principles]]
* [[Sustainability linked loan]]
* [[Sustainability Linked Loan Principles]]
* [[Sustainable loan]]
* [[Syndicate]]
* [[Syndicated loan]]
* [[Term loan]]
 
[[Category:Long_term_funding]]
[[Category:Treasury_operations_infrastructure]]

Revision as of 16:52, 3 April 2015

Rounding is a reduction in the accuracy to which numbers are displayed, in order to make them easier to understand.

Excel has an Advanced option whether to calculate to full accuracy, or only to the displayed accuracy.


Round don't truncate

It's better practice to figures for presentation, rather than truncating them.

For example: 1.0049988 is expressed to 7 decimal places.


Rounding 1.0049988 off to fewer than 7 decimal places, it becomes:

  • 1.004999 to 6 decimal places (NOT 1.004998)
  • 1.00500 to 5 decimal places (not 1.00499)
  • 1.0050 to 4 decimal places (not 1.0049)
  • 1.005 to 3 decimal places (not 1.004)


If you truncate a final result instead of rounding it, it is not a strictly correct presentation.

It's also important not to truncate the results of intermediate workings.

Doing that introduces errors into your final results.


Rounding errors

Even rounding correctly in intermediate workings introduces errors in final results.

The only way to avoid rounding errors is to keep full accuracy in the intermediate workings.


See also