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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What is the investment quantity in this example from How To Lie With Statistics?

How is the 365% ROI figure found in chapter 7 of Huff's How To Lie With Statistics? If I purchase an article every morning for 99 cents and sell it each afternoon for one dollar, I will make only 1 percent on total sales, but 365 percent on…
sam
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Present Value of a Death benefit of a life insurance policy

My question is about: Consider a death benefit of a life insurance policy. It can be obtained in four ways that all have the same present value: A present value of a perpetuity of $ 300 at the end of each quarter; Annuity payments of $ 600 at the…
Lorenz Clark
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Annuity on Principal paid monthly

I have to calculate the annuity amount to be paid monthly on a loan of 5000 with 5% interest rate in 2 years. The annuity should be calculated monthly. The interest will change on the basis of remaining amount. My problem is that every calculator…
Himanshu
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Trouble arranging for interest in annuity to present value formula

The formula is: $$A = P\frac{i(i+1)^{n}}{(i + 1)^{n}- 1}$$ and I need to rearrange for $i$ because I don't know the interest. I can solve this if it were Any help would be greatly appreciated.
joncodo
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Calculating interest on lump sum to match regular savings account interest?

In the United Kingdom some banks offer a type of savings account called a Regular Saver, with these attributes: every month you can deposit a limited amount of money M; the interest rate i is calculated daily but paid after 12 months. Here is an…
Btz
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European calls arbitrage

I have following question, it should be pretty easy, but this subject is still pretty new for me. Given a market where calls of any strike price can be bought and sold. Assume that the interest rate for depositing or borrowing money is zero. Show…
user59163
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Difference between monthly loan payment formula and compound interest formula

The formula to calculate monthly loan payments (i.e. for fixed-rate mortgage) is $(P r)/(1-(1+r)^{-N})$ where $P$ is the principal, $r$ is the monthly interest rate, and $N$ is the number of monthly payments. What is the difference between this…
cslearner88
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Forward contracts delivery price

Given that a stock is currently worth $£25$, and the forward contract delivers in $1$ year, the interest rate is $0.025$ for the first $6$ months and $0.04$ afterwards, then what is the delivery price? I thought the answer would be…
the man
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proof of present value of annuity using the formula for the sum of geometric series

enter image description here Hi, so I have the steps for deducing the present value of annuity from the formula for the sum of the geometric series. However, I don't seem to understand step a,b and c. I know how to deduce the present value of…
Cereen S
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Find compound interest from multiple deposits

Let's assume I make multiple deposits over time: $p_0$\$ $y_0$ years ago $p_1$\$ $y_1$ years ago ... $p_n$\$ $y_n$ years ago Let's assume my interest $r$ is constant and compounded and my current balance is…
Luke Skywalker
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How to find marginal demand?

The demand for a product is given by $q=\frac{10}{\sqrt {4p+1}}$. find the marginal demand at p=6. Worksheet i am solving contain all questions to find price elasticity of demand except above. And if i use formula of price elasticity then incorrect…
Raj Kumar Singh
  • 160
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Simple interest tricky question

A man borrowed $500$ dollar from his friend and decided to return this amount in four installments of $150$ dollar each at the end of $3$, $6$ and $9$th month. Find the rate of simple interest p.a if the first installment is given in the…
Raj Kumar Singh
  • 160
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Calculate repayments on multiple interest free loans

Say I have an undetermined number of loans or varying amounts. Each loan has it's own interest-free period which expires on a different date. I want to calculate a single payment, (Either weekly, fortnightly or monthly) that does not change, to pay…
Michael Smith
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How Can I Arrive at the Fee-Adjusted APR, Accounting for Balance Transfer Fee (But Not Inflation)?

I'm trying to figure out the fee-adjusted interest rate paid when incurring a balance transfer fee on a loan, not accounting for inflation. If the APR is 4%, the loan 5000, the transfer 2% and you pay it off in 200 days (54.8% of the year when…
james_womack
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Interest Calculation Problem

I want to calculate how much I would pay monthly. $X$ = Amount borrowed. $I$= Interest Rate. $Y$ = number of years This is what I have so far, but it's wrong; I'm getting a larger value. $$\frac{X\left(1 +…
user8385
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