Financial Mathematics. Unit 4. Complex annuities.
UNIT 4: COMPLEX ANNUITIES
4.1 Annuities payable mthly
We now consider annuities which are payable more frequently than once per interest
period. We shall refer to an annuity which is payable m times per in

Financial Mathematics. Unit 9. Adjustable-rate loans.
UNIT 9: ADJUSTABLE-RATES LOANS
9.1. Adjustable-rate amortization transactions.
An adjustable (floating) rate loan allows the lender to adjust the interest rate so it
reflects fluctuations in the cost o

Financial Mathematics. Unit 6. Cost and return: effective rates.
UNIT 6: COST AND RETURN: EFFECTIVE RATES
6.1. Effective rate of a pure financial transaction
The ultimate aim of Financial Mathematics is to assist individuals and firms in the
process of fi

Financial Mathematics. Unit 5. Financial transaction.
UNIT 5: FINANCIAL TRANSACTION: FINANCIAL EQUIVALENCE AND
OUTSTANDING BALANCE
5.1 Financial transactions
Financial transaction non simultaneous exchange of money based on a financial
valuation criterion

Financial Mathematics. Unit 2. Theory of Compound Interest.
UNIT 2: THEORY OF COMPOUND INTEREST
2.1. Compound interest
2.1.1.
Compound interest rule
Compounding is the payment of interest on interest. The word compound refers to
the process of interest be

Financial Mathematics. Unit 8. Loans with predetermined rates.
UNIT 8: LOANS WITH PREDETERMINED RATES
8.1. Bullet loan. Interest-only loan (Prstamo americano, in Spanish)
A1 = 0 ; A2 = 0 ; . ; An 1 = 0; and An = C 0
1. Cs?
C 0 = C1 =
. = C n 1 > C n = 0
(

Financial Mathematics. Unit 7. Amortization of a debt: general analysis.
UNIT 7: AMORTIZATION OF A DEBT: GENERAL ANALYSIS
7.1. Amortization of a debt
We will now provide the general analysis of an interest-bearing loan.
Amortization of a loan refers to th

Financial Mathematics. Unit 1. Fundamentals
UNIT 1: FUNDAMENTALS
1.1 Introduction
In any financial transaction, someone (lender) lends a sum of money to someone else
(borrower) for a specific period of time. The party that receives the money must pay
back

Financial Mathematics. Unit 3. Financial value of payments: introduction to annuities.
UNIT 3: FINANCIAL VALUE OF PAYMENTS: INTRODUCTION TO
ANNUITIES
3.1 Annuities. Value of an annuity.
Many financial transactions involve periodic payments. E.g. a great n

Financial Mathematics. Unit 10. Bonds.
UNIT 10: BONDS
10.1. Introduction and Terminology
When a company, a local authority or a government needs a large sum of money they
issue bonds which are sold to a number of investors. A bond is simply a written
docu