Interest at maturity
IAM (interest at maturity) – usually loan or deposit given for a 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 the date when interest payment is made. Using simple IAM, interest payment is made on the maturity date, but using discounted IAM interest is paid on the settlement date.
References
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