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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Find principle after xxth payment by hand. Amortization Schedule

I know how Amortization Schedule works. But is there a way to find the principle and interest after like 50th payment by hand without of course iterating it payment by payment? For example. A 10,000 mortage is repaid every month for the next 25…
assiegee
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Financial Math - Compound Interest Rate

I have PV, PMT and N. I want get I (Tax). Please, if I'm not clear, help me adjust this Question. I don't know nothing about Financial Math. I'm programmer, I need get something like TIR function of Excel and recreate in Python. I just want the…
GIA
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Calculate amount of final payment.

i have a question for my math practice but i do several ways but i still get the wrong answer, please help: Loan payments of $700 due 3 months ago and $1000 due today are to be paid by a payment of $800 in two months and a final payment in five…
K Tiger
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Simple discount and effective interest

Sylvia invests her money in an account earning interest based on simple discount at a $2$$\%$ annual rate. What is her effective interest rate in the fifth year? The formula for effective interest rate is $r = (1+\frac in)^n -1$ The way I would do…
Allan
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Calculating WACC and Value of the firm?

The company has $2,500$ million shares outstanding. The market value of its debt is $\$3.88$ billion. The current level of FCFF is $\$1.9$ billion. The equity beta is $1.5$ The market equity risk premium is $7.0$ percent The risk free rate is…
doolgasg
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Question about Interest

An accumulation function is of the form $a(t) = at^2 + bt + c$. Rick deposited $\$10,000$ in an account that is subject to this accumulation function. After $7$ years, Rick has $\$12,870$ in his account. Leah deposited $\$25,000$ in another account…
soccerfan
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Lottery, Annuity, Interest rate

The largest amount won by an individual in a U.S. lottery was $314.9$ million. Instead of receiving $314.9$ million in 30 equal annual payments, including one immediately, the winner chose a lump sum, which came to $170$ million. What was the…
Eric Brown
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Simple Percentage / Interest

I'm a developer building a financial reporting tool for a client. They have given me a calculation to find the amount of interest earned by an account throughout specific date ranges. But the value they are expecting at the end differs to what my…
John Tiggernaught
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True Discount Rate-Finance

On January $1$, $2017$, you purchased a 10-year bond issued by Alpha Inc. at par. The bond features an $8\%$ coupon ($\$40$ every six months) and a par value of $\$1,000$. Within minutes of purchasing the bond, Alpha announced financial problems,…
diego711
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Covariance Matrix C given expected returns

If I'm given the expected returns, standard deviations, and correlation coefficients how can I compute the covariance matrix C?
user130272
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Calculating the risk-neutral probability

Two scenarios are foreseen for a certain stock after one period: one in which the stock value is $110E$ and another in which the value is $90E$. Its current value is $S_{0}=100E$. Furthermore: Each operation of selling stock to the market carries a…
Anabella Woud
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Option price on asset with continuous dividend D

I know that the European call option price fulfills the following equation: $$ \frac{\partial V}{\partial t} + \frac{1}{2} \sigma^2 S^2 \frac{\partial^2 V}{\partial S^2} + r S \frac{\partial V}{\partial S} - rV = 0, $$ where $V(S_t,t) = C(S_t, t) =…
MMM
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Suppose that i sub $n = 5%$ for all $n ≥ 1$. How long will it take an investment to triple in value?

Suppose that i sub $n = 5%$ for all $n ≥ 1$. How long will it take an investment to triple in value? I tried to use $3x=x(e^{.05t})$ then i got $\ln3+\ln x=\ln x+.05t$ so $t=\ln(3)/.05 = 21.97$ but i know that the answer is $22.5171$
rattle
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how much will $\$10,000$ grow to in three years at the same rate of interest?

If $\$64$ grows to $\$128$ in four years at a constant effective annual interest rate, how much will $\$10,000$ grow to in three years at the same rate of interest? I tried to use $(1+i/n)^{n-1}$ to solve for the interest rate but I don't…
rattle
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Dividend Discount Model - What is the cost of ordinary shares

If the formula(s) is/are Price = D (1+G) / R - G Market Value of share = D/R D = the dividend R = return on equity G = growth rate nominal value £0.65 current market value ££67.31 current level of dividend is £0.61 grows at a compound rate of 8.9%…
Maestro
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