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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Currency Conversion Math

Here is my question. If I have the following exchange rates: 1 Euro = 1.13 USD 1 British Pound = 1.56 USD Is it possible to calculate the value of Euros to British Pounds given that I only have exchange information for these currencies against USD…
CBA110
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Savings account interest rate

Just a brief question regarding bank interest rates, my apologies if this is a duplicate, I did a quick search but came up with no results relating to my question, surprisingly. Also, please excuse my ignorance with interest-based math. Once upon a…
iCodeWithACalculator
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How do you calculate a fee percentage to handle a fee being charged?

Problem is that we get charged a 3% fee. We add this 3% fee to the invoice. When we get the amount back they charge 3% on the invoice plus on the fee we added. What formula can I use to figure out what percentage to charge on this so that we…
c8irish
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Black Scholes model

I am looking to program the Black Scholes model, but I don't understand how to write this equation as basic math. Equation => http://en.wikipedia.org/wiki/Black%E2%80%93Scholes Known inputs =>…
Kirk Strobeck
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Payments and Interest Rates

Suppose you have two options for making a payment: (A) Pay $90 \%$ of the purchase price two months after the date of the sale. (B) Deduct $X \%$ off the purchase price and pay cash on the date of sale. Determine $X$ so that a customer is…
NebulousReveal
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Interest rates. What is the difference between $I=I_0(1+r)^t$ and $\frac{dI}{dt}=rI$?

When I was in school, we used this method for generating the amount of money would be in a bank account after $t$ years with interest rate $r$: $$I=I_0(1+r)^t \text{ where }I_0\text{ is the initial investment}$$ but now in my mathematical finance…
Daniel
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Black-Scholes formula is a monotonic increasing function of the volatility. Proof?

I'm trying to show this statement: that Black-Scholes formula is a monotonic increasing function of the volatility ($\sigma$). I need to proof it from the Black-Scholes formula which…
Carles Pérez
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How to calculate present value with changes interest

How to calculate present value with period of 5 years and 6 months? Besides that, there is interest changes and compounded differently. Is there any formula?
noobie
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The meaning of "average annual compound rate"

I am currently working on this problem and I am having a hard time finding the right number. A mutual fund advertises that average annual compound rate of returns for various periods ending Dec 31 2005 are as follows: 10 yrs = 13%, 5 yrs = 17%, 2…
hyg17
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Finding the annual withdrawal, given initial and final amounts, and interest rate

I am working on the following problem and I keep getting a different answer. The principal $P=10,000$. The annual interest rate is $i=4\%$. The money is deposited at time 0 and the interest is compounded yearly for 10 yrs at the end of each year.…
hyg17
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Find the balance using Investment Year Method...

Here's the problem: Now, here is what I did: Since we invested $\mathbb{$}1000$ at the beginning of $1989,1990$, and $1991$, we find the balance of each contribution over the specified intervals of time and sum them together. So, denoting $C_{y}$…
user146925
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Calculate repayments amount on loan

I doing some work on a client website, however I'm finding it difficult to calculate the correct interest amount. I have the principle amount, for example £200 The loan is repaid over 3 months in monthly instalments I have an annual interest rate…
John
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Problem regarding equation of value and nominal discount...

Here's the full problem: Xiang and Dmitry are friends. They agree that Xiang will pay Dmitry $\mathbb{$}800$ immediately and another $\mathbb{$}200$ at the end of three years. In return, Dmitry will pay Xiang $\mathbb{$}K$ in exactly one year and…
user146925
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Problem involving nnual dollar-weighted yield-rate on stocks...

Full problem: Arthur buys $\mathbb{$}2000$ worth of stock. Six months later, the value of the stock has risen to $\mathbb{$}2200$ and Arthur buys another $\mathbb{$}1000$ worth of stock. After another eight months, Arthur's holdings are worth…
Savage Henry
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Amortize the debt problem

Monthly payments are made on 130000 dollars at 5% for 25 days. Determine the payment needed to amortize the debt.
user108605
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