Generally acceptable principles for financial amortization: a modest proposal

We propose a minimal set of commonly acceptable principles to consistently formulate amortization schedules in accordance with different contractual clauses. Our goal is bringing to the fore premises that are sometimes left implicit, and yet seem to draw a wide consensus in practice. We demonstrate by means of examples how these principles may be used to deal with risk or financial innovations, and to fill gaps arising from unforeseen contingencies.

Automated summary

This paper proposes a minimal set of commonly acceptable principles for formulating consistent amortization schedules based on different contractual clauses. The goal is to clarify implicit premises that have gained wide consensus in practice. Examples are provided to demonstrate how these principles can be applied to manage risk, financial innovations, and unforeseen contingencies.