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.

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2637 questions
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Financial Mathematics, interest problem

Determine the amount of interest earned from time $t=2$ to $t=4$ if $240$ is invested at $t=1$ and an additional $300$ is invested at $t=3$. Given, $a(1)=1.2$, $a(2)=1.5$, $a(3)=2.0$, $a(4)=3.0$ I tried finding $A(0)$ using the equation…
Tosh
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Financial mathematics problem. ( Deferred annuities ).

We need to calculate present value(value at t=0) of the payments of amount $1$ made at $t = m+1 , m+2 , ...... , m+n$ and no payments are made between $t=0$ to $t=m$ , effective rate of interest is $i$. We calculate the above as follows :…
User9523
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How is APR calculated?

I would be extremely grateful if someone could help with this problem. I'm planning a series of lessons on basic finance and wanted to brush up. I will not have to teach this but I like to keep a step ahead of students. Suppose I wish to borrow…
Karl
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What was the Shopkeepers Loss

Here is the problem : A lady buys goods worth 200 from a shop where the goods are sold non-profit.The lady gives the shopkeeper a 1000 rupee note . The shopkeeper gets the change from the next shop kepping 200 and giving the lady back 800 . Later…
Rayyan Merchant
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Covariance of a stock portfolio

I need to find the covariance of two stocks in a portfolio. I know you can calculate covariance as: cov = 1/(n-1)[(summation:Xi-(mean of X))*(summation:Yi-(mean of Y))] However, I don't think I can use the formula above for the question I have. In…
whats_fold
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Formula for APR with Odd Days

I need to programmatically calculate APR based on the following inputs: Principal Amount Number of payments (for example, 3 months loan is 3 if paying monthly, or 6 bi-weekly payments) Payment each period From this, I need the formula for APR.…
doremi
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Determining interest rates when comparing offers

Option 1: $ 0 down, $ 424 in 1 year , $ 300 in 2 years Option 2: $ 80 down, $ 245 in 1 year , $ 400 in 2 years Determine the range of interest rates for which the present value of Option 2 is less than the present value of Option 1. How would…
user277231
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What exactly is the meaning of future value/present value of an annuity?

We've been dealing with the idea of annuities in a math course I'm taking, and the idea of "present value" and "future value" have come up. So basically, the "value" of an annuity before someone makes any payments is a certain value (why?) and after…
user3472798
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How to calculate interest rate given principal initial amount, future value amount, term with monthly contribution

I want to know how to apply a sequence of steps in a program with any mainstream programming language (like Ruby, Java, Clojure etc). Find nominal interest rate given principal initial amount, future value amount, number of years allowed to reach…
user2476533
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Finance and effective interest rate

I'm trying to solve a finance question, and am getting slightly confused. The question is as follows: On Jan. 1st, 2000, 3500 dollars is deposited into a bank account. On Jan. 1st 2005, 4000 dollars is deposited. On Jan. 1st 2009, 2500 dollars is…
user3472798
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Looking for a Formula for ROI, couldn't get an answer in Finance

This is honestly a pretty simple problem, but for whatever reason I am not able to pull it all together. I was talking theoretically with a friend and neither of us can nail down the maths so I coming to the internet for help. You are loaning out…
Rob
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Evaluating NPV caluclators

I'm working on a Net Present Value set of problems and would appreciate someone else's insight as my Excel calculations are coming up differently than other online calculators for NPV. I've read on chatboards that this is a common problem, but…
Josh
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Retirement Fund with Interest

A young woman 22 years of age has just graduated from college. She accepts a good job and desires to establish her own retirement fund. At the end of each year thereafter she plans to deposit 2000 in a fund at 15% annual interest. How old will she…
james
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Interest with Inspection Fee in Promissory Note

A man borrowed from a bank a promissory note that he signed in the amount of 25000 for a period of one year. He received only the amount 21915 after the bank collected the advance interest and an additional amount of 85.00 for the inspection fee.…
james
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Compound Interest Calculation (Years + Months)

My question is with regards to the calculation of "Compound Interest". I have the formula below where I would get an answer to the total value of the investment over a period of "years". $A$ = Future value $P$ = Principal amount $R$ = Annual…
CBA110
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