Mathematics Stack Exchange
Mathematics Stack Exchange

Questions tagged [finance]

Questions related to the various aspects of financial mathematics. Topics include option pricing, arbitrage theory, market completeness and stochastic analysis.

Mathematical finance, also known as quantitative finance, deal with finance and financial markets in a mathematical manner.

Some examples of mathematical finance are the fundamental theorem of asset pricing which provides the conditions for a market to be arbitrage-free and complete, and the Black–Scholes equation, which uses partial differential equations to describe the price of an option over time.

If you don't think your question is suited for this site, try:

2637 questions
1
vote
1 answer

Sum of Present value

The sum of the present value of 1 paid the end of n periods and 1 paid at the end of 2n periods is 1. Find $(1+i)^{2n}$. Present value for n periods is given as $(1+i)^{n}$ and that of 2n follows the same procedure, but I do not get the answer.
Tosh
  • 1,614
1
vote
1 answer

Calculate Compounding Interest Rate From Total Interest Rate?

I would like to be able to calculate the interest rate that is compounded for a given total interest rate, and number of compounding events. TotalInterestRate = ((1+CompoundingRate/#CompoundingEvents)^#CompoundingEvents)-1 Basically would like to…
spider1204
  • 11
1
vote
1 answer

How do you calculate the breakeven amount for two credit cards with different fees and rebates?

Credit Card (CC) M offers a rebate of cash back of $a$ dollars, with NO annual fee. CC S offers a rebate of cash back of $b$ dollars, but charges an annual fee of $f$. How much must I spend with CC S to breakeven with CC M, to ensure my…
user53259
1
vote
0 answers

Describe a process mathematically

I am simply wondering how to explain this process mathematically: Lets say that we have a set $A_j$ of sets $B_i$ such that $A_j$ is the set off all $B_i$ where $i\leq j$ Now lets say that set $B_i$ is a set looking like this: {Date…
ALEXANDER
  • 2,099
1
vote
1 answer

Annuity payments $2n = n$

I'm having trouble with this question: For an annuity of $3n$ payments of equal amount at periodic interest rate $i$, it is found that one period before the first payment the present value of the first $n$ payments is equal to the present value of…
rondoe
  • 11
1
vote
1 answer

Compute the risk measured by the standard deviations $\sigma K_1, \sigma K_2, \sigma K_3$, does this have to do with weights?

Compute the risk measured by the standard deviations $\sigma K_1, \sigma K_2, \sigma K_3$ for each of the investment projects, where the returns $K_1, K_2$, and $K_3$ depend on the market scenario: $$ \begin{matrix} Scenario &…
idknuttin
  • 2,475
1
vote
1 answer

The three year bond has face value $100, and pays \$5 coupons annually, the last one at maturity. Assume that the continuously compounding rate is 7%.

The three year bond has face value USD 100, and pays USD 5 coupons annually, the last one at maturity. Assume that the continuously compounding rate is 7%. (a) Find the price of this bond. (b) Consider the investor who invests 1000 in these bonds.…
idknuttin
  • 2,475
1
vote
2 answers

why does this answer on paying a mortgage two years earlier make sense?

Suppose that you took a mortgage of 100000 on a house to be paid back in full by 10 equal annual installments, each consisting of the interest due on the outstanding balance plus a repayment of a part of the amount borrowed. If you decided to clear…
idknuttin
  • 2,475
1
vote
1 answer

How to find arbitrage for forward rate of exchange?

Assume that $S(0)$ is the current rate of exchange for foreign currency. Assume that and $K_h$ and $K_f$ are rates of return on home and foreign currency if it is invested over a period $T$. (A) Assume that the forward rate of exchange $F$…
idknuttin
  • 2,475
1
vote
1 answer

can someone explain how bonds work and how to calculate the value of a bond?

I am taking financial mathematics and in class I learned a formula to calculate the value of a bond, $B=\frac{F}{1+r}$ if one payment or if coumpund $B=\frac{F}{(1+r)^n}$ where $B$ is the value of the bond, $F$ is the face value and $r$ is the…
idknuttin
  • 2,475
1
vote
2 answers

Investment in simple interest

Consider an investment with nonzero interest rate $i$. If $i_5$ is equal to $i_{10}$, show that interest is not computed using simple interest. Answer is If $i$ is a simple interest rate, then $i_5=i_{10}$ implies…
Moody Blue
  • 25
1
vote
1 answer

Effective rate of interest

An investor purchases $1000$ worth of units in a mutual fund whose units are valued at $4.00$. The investment dealer takes 9 % front-end-load (deduction) from the gross payment. One year later the units have a value of $5.00$ and the fund managers…
Moody Blue
  • 25
1
vote
3 answers

Amount of interest

Find the amount of interest earned between time t and n where $t
Tosh
  • 1,614
1
vote
1 answer

Confirmation of Interest and financial mathematics problem

I'm having trouble with two questions A fund earns a nominal rate of interest of 6% compounded every two years. Calculate the amount that must be contributed now to have 1000 at the end of six years. My thoughts: Since it is compounded every two…
user270494
  • 687
1
vote
1 answer

How do I go about finding effective interest/discount please?

How do I go about solving this please? I solve a lot of interest questions but this looks different. I'm just trying to solve as many as questions as possible. Am I ought to use the compound interest formula directly? If an annual discount rate of…
john scott
  • 95
1 2 3
…
52 53