Question 1
In July, the price of an asiago bagel at Bagel King was $1.55. In August, Bagel King
increased the price of its asiago bagel to $1.70. As a result of the price increase from
July to August, the demand for Bagel King's bagels _.
Selected Answer:
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 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 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 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
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 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
REVIEW OF MATHEMATICS
This short review has been written for the benefit of the students attending the Financial Mathematics course in English.
The objective is twofold. The main goal is to provide the students with a basic glossary of purely mathematical
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
PROBLEM SET (8/10)
Financial Mathematics
UNIT 8: LOANS WITH PREDETERMINED RATES
8.1.
Analyze a loan of 36,000 for 6 years at an interest rate of 6%, in the following cases:
a. The loan is to be repaid in a lump sum after 6 years.
b. The loan is to be repa
PROBLEM SET (6/10)
Financial Mathematics
UNIT 6: COST AND RETURN: EFFECTIVE RATES
6.1.
A person deposits 1,500 in a savings plan every year for 5 years. The annual effective rate is 5%
during the first three years and 3.5% thereafter. Find the final accum
PROBLEM SET (10/10)
Financial Mathematics
UNIT 10: BONDS
10.1. Suppose the following bond issue:
N = 100,000 bonds
C = 1,000
n = 3 years
i = 0.0325
Bonds with annual coupons.
Find:
a. The future cash flows for the whole issue and for a single bond.
b
PROBLEM SET (4/10)
Financial Mathematics
UNIT 4: COMLPEX ANNUITIES
4.1.
Consider the following dated values for an annuity. In all cases the annual effective interest rate
associated to each period is 0.04
a)
V = a a 5 0.04 (1 + 0.04) 2
b)
V = a s 3 0.04
PROBLEM SET (1/10)
Financial Mathematics
PROBLEM SET
UNIT 1: FUNDAMENTALS
1.1.
Find the simple interest on
(a) a 90-day loan of 500.00 at 8%;
(b) a 118-day loan of 600.00 at 7%;
1.2.
At what rate of simple interest will
(a) 1,000.00 accumulate to 1,420.00
Departamento de Economa Financiera y Actuarial
35883 - MATEMTICAS FINANCIERAS / FINANCIAL MATHS
SEGUNDA CONVOCATORIA: 4 DE JULIO 2014
APELLIDOS:
NOMBRE:
GRUPO:
NORMAS A CONSIDERAR
1) No
podr realizarse con lpiz.
2) La respuesta a cada pregunta deber situa