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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How to convert an interest rate from bank discount basis to continuous compounding

I read on Investopedia that a 360-day-count convention is being used in the case of Bank Discount Basis. And I found the following formula on Wikipedia: R = n*ln(1 + r/n) This is the conversion formula for converting an interest rate r with…
PhysicistEngineer
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Basic annuity loan problem

I've got a loan of $\$32000$, which I need to repay in $36$ monthly payments, with annual rate of $10\%$. What is the amount of monthly payment, which I need to pay? There will be $36$ payments, thus $i=10\%/12=0.00833$. What's next step? I am new…
user187965
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Reducing balance with overall percentage

Hi I have an item for £4000 which should have a reduction of 20% over the year. I want to calculate the value for each month. What equation would I use?
Mark O'Grady
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"Cost per Lead Quality" Score

I'm a marketing manager and would like to calculate a cost per lead quality "score." I run a number of marketing campaigns, and I've figured out how to calculate a quality percentage for each campaign (i.e. how likely leads are to become a sale).…
Chris
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Future value of investment with quarter payment

I'm a bit stuck on this problem, tried to solve it, but I don't know what is wrong with my way of thinking. A bank offers a deposit with the interest rate of 5% per annum with quarterly interest capitalization. We make a systematic investment…
Photon Light
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Put-Call Parity

This question is from Pliska's "Introduction to Mathematical Finance" Suppose the interest rate r is a scalar, and let c and p denote the prices of a call and put, respectively, both having the same exercise price e. Show that either are marketable…
kumhmb
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How to calculate total loan knowing only the APR, term and monthly payments?

I'm building a loan calculator with two different methods of user entry. One one side the user can enter their desired loan amount and specify a term and it will display the overall loan amount and monthly payments. The formula for this is: …
JonW
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Does interest apply for the last month of an amortization?

I'm working out the loan repayments using the amortization formula $$\frac{\text{principal} \cdot \text{paymentPercentageInDecimal}}{1 - (1 + \text{paymentPercentageInDecimal})^{-\text{payments}}}$$ I'm confused about the final month. Due to…
LiamRyan
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Formula for fitting step-wise increasing loan payments into a given term

My company is developing a product that helps people project out what-if scenarios for paying down their student loan debt. One of the government options for paying off debt is called the "graduated" program, under which the beginning payment is…
Chad P
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Question on interest

I have a question about interest on a loan from a family member, and it is difficult figuring out. I borrowed \$35,000 @ 3.5% in June, 2013, and here's the break down of the payments I've made: June- \$0 July- \$0 August- \$1000 September-…
Ethan
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What is the purpose of a trailing minus sign?

I cashier at a grocery store and the POS system we use (SurePOS by IBM/Toshiba) uses trailing minus signs for all of its representations of negative numbers. Examples: Coupon being rung up: MC SCANNED COUPON 1.50- Change due when a check is…
djmordigal
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Homework question compound interest

If $ \$ 6000$ are invested at 7% compounded continuously, what amount after 2 years? I know how to set it up but at one point I get lost $$A=Pe^rt$$ $$A=6000^{0.07}(2)$$ Somebody please help.
user156836
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Including future value into calculation of interest rate

There is a discussion on this page regarding the back-calculation of the interest rate, given the other parameters of a typical finance calculation (present value, repayments and term length). Three methods are given - one is a brute force search…
cbp
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To determine effective cost of investment

I have this problem,need of help on how to attempt it. If you pay for a certain investment with installments of GCD 1000 in early January and GCD 1000 in early July and then receive GCD 2000 in late December of the same year,find the effective cost…
pimbi
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Pension calculation

I have very difficult problem (for me) I have to create a pension calculator. What I know is: I am now 30 years old, will stop paying as I am 60 (so I will pay over 30 years) and I will live about 30 years. I want to get about 1000 € per month…
Alexander_F
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