UECM1403 Theory of Interest
Topic 3
Basic Annuities
1.
Introduction
Annuity = a series of payments made at equal intervals of time. More
generally, any terminating stream of fixed payments over a spec
Topic 6
Bonds
1.
Introduction
One of the major applications of the theory of interest is the determination of prices and values
for bonds and other securities, such as preferred stock and common stock
UECM1403 Theory of Interest
Topic 4
More General Annuities
1.
Level Payment Annuities Some Generalization
1.1
Differing payment & Interest conversion
Previously, the payment period and the interest co
Test 2
1.
Find the accumulated value at the end of 10 years of an annuity in which payments are
made at the beginning of each half-year for 5 years. The first payment is $2000, and
each payment is 98%
UECM1403 Theory of Interest
Topic 2
Solutions of Problems in Interest
1.
Interest Problem
An interest problem involves four basic quantities:
The principal originally invested.
The length of the inves
UECM1403 Theory of Interest
Topic 3
Basic Annuities
1.
Introduction
Annuity = a series of payments made at equal intervals of time. More
generally, any terminating stream of fixed payments over a spec
UECM1403 Theory of Interest
Topic 1
Measurement of Interest
1.
Interest Accumulation and Effective Rates of Interest
1.1
Definition
A common financial transaction is the investment of an amount of mon
UECM1403 Theory of Interest
Tutorial 5: More General Annuities
1. A 20-year annuity pays 100 every other year beginning at the end of the second year, with
additional payments of 300 each at the ends
UECM1403 Theory of Interest
Tutorial 10: Yield Rates and Practical Applications
1. A fund earned investment income of 9200 during 1999. The beginning and ending
balances of the fund were 100,000 and 1
UECM1403 Theory of Interest
Tutorial 3: Basic Annuities
1. On 1 January, 2000 Smith borrows an amount
with the following 10-year payment
scheme. 1000 at the end of each even-numbered year, 2000 at the
Topic 8
Practical Applications
1.
Yield Curves, Spot Rates and Forward Rates
1.1
Yield Curves
Term structure of interest rates = A relationship between rates of interest and
the term of the investment
Topic 7
Yield Rates
1.
Discounted Cash Flow Analysis and Net Present Value
1.1
Discounted cash flow analysis
In previous topics, we have analyzed the present values of various types of
financial trans
UECM1403 Theory of Interest
Topic 6
Bonds
1.
Introduction
One of the major applications of the theory of interest is the determination of prices and
values for bonds and other securities, such as pref
UECM1403 Theory of Interest
Topic 1
Measurement of Interest
*Examples will be given during the lecture*
1.
Interest Accumulation and Effective Rates of Interest
1.1
Definition
A common financial trans
UECM1403 Theory of Interest
Topic 5
Amortization Schedules and Sinking Funds
1.
Introduction
This topic discusses two methods of repaying a loan:
The Amortization Method: In this method the borrower r
UECM1403 Theory of Interest
Topic 2
Solutions of Problems in Interest
1.
Interest Problem
An interest problem involves four basic quantities:
The principal originally invested.
The length of the inves
UECM1403 Theory of Interest
Topic 4
More General Annuities
1.
Level Payment Annuities Some Generalization
1.1
Differing payment & Interest conversion
Previously, the payment period and the interest co
UECM1403 Theory of Interest
4.
Sinking Funds
4.1
Sinking fund with an interest same as the rate of the loan
A borrower can accumulate a fund which will exactly repay the loan in one lump sum
at the en
Topic 8
Practical Applications
1.
Yield Curves, Spot Rates and Forward Rates
1.1
Yield Curves
Term structure of interest rates = A relationship between rates of interest and the term
of the investment
Topic 7
Yield Rates
1.
Discounted Cash Flow Analysis and Net Present Value
1.1
Discounted cash flow analysis
In previous topics, we have analyzed the present values of various types of financial
trans
UECM1403 Theory of Interest
Topic 5
Amortization Schedules and Sinking Funds
1.
Introduction
This topic discusses two methods of repaying a loan:
The Amortization Method: In this method the borrower r
UECM1403 Theory of Interest
Tutorial 7: Amortization Schedules
1. On a certain loan with annual payments, the first payment is made one year after the loan
was made. The interest portion of the first