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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Stock/Futures put options

How do you find out how much a put contract would cost? Example: The premium for a 99.00 Eurodollar futures put option is 0.55 and the spot price is 98.51 So I have the intrinsic value which is $1225, but I am not sure how to compute the time…
Matt
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Determine Present value if you have a payment, interest rate, term

If I have a payment amount, interest rate, and term can I determine the Present Value? for example: Payment: $631.35 Rate: 8.50% Term: 3 years num pay per year: 12 Present Value: ? ($20,000) Thanks for your help!
Zaffiro
  • 103
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Loan and annuity (prospective methods)

The question is a loan of $10,000 is to be repaid over 10 years by level annual repayment of capital and interest. The interest rate to be charged on the capital outstanding will be 6% per annum for the first 4 years and 8% per annum…
alan.cheung
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How long does it take an investment to quadruple in value if it earns 5% simple interest per year?

How long does it take an investment to quadruple in value if it earns 5% simple interest per year? I'm not sure about how to find it but the Awnser: 60 years
dayday
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Value of an Asian option with squared integral

Is it possible to find a closed form solution of the value of an asian option paying $(\int_0^T S_u du)^2 $ at maturity? I know there is no closed form solution if the payoff is of the type $(\int_0^T S_u du)-K $ but I do not know if it is possible…
Juan Imbet
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Annuity immediate

An annuity immediate has quarterly payments of $1000$ for $25$ years at a rate of $6 \%$ converted quarterly. Find its present value. The effective interest rate $i$ is $0.06/4$. So let $v = \frac{1}{1+i}$. Then wouldn't the present value be $1000…
NebulousReveal
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Loan Repayment and Annuities

A loan for $50,000$ has level payments to be made at the end of each year for 10 years at an annual rate of $9 \%$. (a) Find the balance at the end of $3$ years. (b) Find the interest paid in the third payment. So I think this involves using…
NebulousReveal
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Why does PERT work?

e is the limit of (1+1/n)^n. So how come we do Pe^rt to calculate continuously compounded interest? The regular formula for compound interest is (1+r/n)^tn, with rate being part of the base, not the exponent. How come with regards to continuously…
Rachel
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Calculating interest on changing principal amount

I'm writing software and I'm trying to calculate interest on a principal value that changes daily in a predictable way. For example, if you saved $5 each day for five years at a 4% annual interest rate. I can brute force this calculation, but I…
ntaggart
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How to solve a Compound Interest Question with yearly withdrawals?

The current period is January 2015 A Principal wants to make 3 deposits in the bank: Start of 2015, Start of 2016, Start of 2017, And wants to give a $5000 scholorship for to the best student at the end of the following years: $5000 end of…
Cescy
  • 103
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Loan Interest Discrepancy

Suppose that I have a loan value $x$ and interest rate $r$. The simple interest is then $x\cdot(1+r)$. If I take out a loan compounded annually and paid monthly for $12$ months the amount at the end of the year would be the same. Why is it then that…
user195519
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What is the value of x with exponential growth but decreases as it reaches its maximum?

I am building a financial model. I am looking for the value of Y:number of subscribers over X:month. The model calls for the following. Competing of a market with 500,000 exclusive subscribers. Growth in year one will be exponential month over…
Jason Waldrip
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Draw the price-yield curves for bonds, B1 and B2 on the same yield-price plane

Consider a bond B1 which matures in 30 years and a bond B2 which matures in 15 years. Both have a facevalue $100 and semi annunal coupon pmt 7%(2). Draw the price yield curves for B1 and B2 on the same yield-price plane with yield on the horizontal…
jmat24
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How is Excel's `RATE(nper, pmt, pv)` evaluated?

I am trying to come up with the same answer as using the function RATE. I've tried several formulas to no avail. As an example, if I plug in =RATE(60,94.36,-5300), it evaulates to $.00218$ . The closest formula using the same time of inputs is the…
Chad Harrison
  • 509
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2 answers

annual and effective annual interest rate

Can anyone help me to find the answer to the question below? I am taking the Engineering Economics exam and need to be sure about the correctness of my answer. Here is the question: Smart Visa, Principal Card, and Acrobat Express are 3 credit card…
Vahid Garshasbi
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