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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Early withdrawal fee for compound interest CD investment

Suppose you buy a CD for $1000 that earns 2.5% APR and is compounded quarterly. The CD matures in 5 years. Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest. What is the early withdrawal fee on…
april
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Compute the net present value of this project in dependance of the interest rate p.

A project requires an investment today. There will be yields after one and after two years. Today's investment is CHF150,000. The yield are CHF 50,000 after one and CHF 102,000 after two years. Compute the net present value of this project in…
user443248
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Net present value equations

I have this problem An investor enters into an agreement to contribute $7,000$ immediately and $1,000$ at the end of two years in exchange for the receipt of $4,000$ at the end of one year and $5,500$ at the end of three years. I tried setting…
llawliet_78
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Am I in the right track? Varying annuity interest

You are given: (i) $X$ is the current value at time 2 of a 20-year annuity-due of 1 per annum. (ii) The annual effective interest rate for year $t$ is $\dfrac{1}{8+t}$. Find $X$ Here is what I did, since $X$ is the current value at time 2, (denote…
llawliet_78
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Find i and find n

The question is: One bond of face value 100 with semiannual coupons and r =0.025 costs 75.74. A similar bond with semiannual coupons and r=0.04 costs 112.13. Both are redeemable at par in n years and have the same yield rate i. (a) find i, (b) find…
Tiny-E
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What is the value of a principle after 30 DAYS for an annual interest compounded annually?

If an amount of $1,000 \$$ is deposited into a savings account at an annual interest rate of 10%, compounded yearly, what the value of the investment after 30 DAYS? Can anyone help me with this? Is it enough to just do $A = (1 + r/n)^{nt}$ and…
Nissan
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How much should they ask him to repay for a loan?

Mr.Hill wishes to borrow 5000. He will repay the loan with a single payment at the end of one year. The lending agency has a "risk free" rate of interest of 13%, but estimates there is a 8% chance that Mr.Hill will not repay the loan. How much…
Tiny-E
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Find an expression for each of the following?

A loan is being repaid with 20 annual installments of 1. Interest is at effective rate i for the first 10 years, and j for the last 10 years. Find an expression for each of the following: a)The amount of principal repaid in the eighth installment. I…
Tiny-E
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Find the price which should be paid for an annuity

Find the price which should be paid for an annuity of 500 per year for the next 10 years if the yield rate is to be 11% and if the principal can be replaced by a sinking fund earning 8% per year for the next 6 years and 7% per year for the for the…
Tiny-E
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Range of interest rates

Find the range of interest rates for which each of the contracts in (question below) has a higher present value then the other two. The contracts are as follows $(a)$ $3,200,000$ per year for the next five years, payable at the end of each year…
Harper Jeffrey
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Prove that $d_n$ is constant in the case of compound interest

the question is asking me to Prove that $d_n$ is constant in the case of compound interest. What I know so far and have tried is the formula for compound interest is $a(t)=(1+i)^t$ and I think that $d_n$ is possibly supposed to represent the…
Harper Jeffrey
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Mathmatical Formula Possible?

I have a problem that I think can be solved by a maths formula but I am really not good enough to solve. So please feel free to impress me :) My Problem : Say I have a loan with a customer, that has a schedule like this : 01 Jan - Pay $100 to…
Christopher Townsend
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calculate future value on the based of constant payment

i am new in finance and want to know not only how to calculate financial parameters using formulas,but underlined idea as well, for instance , let us consider following problem : A has invested US $100 in 2016. The payment has been made yearly.…
dato datuashvili
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Query on Liability Stream

A quick question: Suppose we have a liability stream which is an annuity of USD $1,000,000$ per year, for the next $40$ years. Does this mean that we do not include discounted rates and assume that the liability of USD $1,000,000$ remains constant…
Stoner
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Finance-Efficient Frontier and Singular System

I am working on an efficient frontier problem for my financial theory class. The idea is to select weights that minimize a portfolio's variance subject to 2 constraints: the first constraint is that the weighted average of mean of the assets equals…
ChinG
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