Everything Flashcards
What is the interest conversion period? What is it denoted by?
The period between two successive interest payments, denoted by p.
What is an alternative name for interest conversion period?
Quotient of the time unit.
What denotes the interest per conversion period
i lower p
What denotes the nominal interest rate?
i upper p
If the nominal interest rate is 4% p.a compounded quarterly, how much interest is paid per quarter?
1%
If the nominal interest rate is 8% p.a compounded quarterly, how do you find the annual effective rate?
Divide 8% by 4 =2%
Find (1.02)^4 which gives the AER. (8.243%)
If interest is paid in advance, interest equals..?
Equals the rate of discount d (also applies pthly)
If m>n what is the inequality between i upper m and i upper n?
i upper m > i upper n
What relates the interest rate to the discount rate?
1(1+i) = 1-d
What is the formula for i given the force of interest?
i = e^δ -1
What is the formula for δ given the rate of interest?
δ = ln(1+i)
What is the formula for a compound discount loan of 1 year?
Future value x (1-d) = present value
What is the formula for the discount rate given the force of interest?
d = 1-e^(-δ)
What is the formula for i upper p given the force of interest?
i upper p = p(e^(δ/p)-1)
What is the formula for d upper p given the force of interest?
d upper p = p(1 - e^(-δ/p))
What is the present value for an annuity paying 50 pounds every month with i upper 12 = 0.05 for 3 years?
600 times a angle 3 upper 12
What is the formula for i given d?
i = d/(1-d)
What is the formula for d given i?
i/(1+i)
What formula relates d to d upper p?
1-d = (1-(d upper p)/p)^p
What formula relates a angle n to s angle n?
a angle n = v^n * s angle n
What formula relates a double dot angle n to a angle n?
a double dot angle n = (i/d)*(a angle n)
What formula relates s double dot angle n to s angle n?
s double dot angle n = (i/d)*(s angle n)
What is the present value of a perpetuity immediate?
a angle infinite = 1/i
What is the present value of a perpetuity due?
(1+i)/i
