Tagged Questions
0
votes
0answers
49 views
Drift equation / Girsanov's Theorem
Define $$\frac{dS_t}{S_t} := \mu \, dt + \sigma^B \, dB_t +\sigma^W \, dW_t,$$ $$dS_t^{(0)} := S_t^{(0)}r \, dt,$$ where the constants $\mu, \sigma^B,\sigma^W$ and $r$ all positive and $\mathcal{F}_t$ ...
0
votes
0answers
21 views
SDE(s) satisfied by Radon Nikodym derivatives of martingale measures?
Given:
Money Market Account: $dR_{t}=R_{t}r_{t}dt, R_{0}>0$
Risky Asset: $dS_{t}=S_{t}(\mu_{t}dt+\sigma_{t}dB_{t}), S_{0}>0$,
where $r, \mu,$ and $\sigma$ are positive processes and $B$ is a ...
2
votes
1answer
24 views
Financial Bonds 500 $1,000 bonds with stated rate of 5% issued at par. 10 year term and pay interest semi-annually.
Every time I try and calculate this problem something comes up wrong. Either from working it out by hand or using my BA II plus, I cannot get the answer shown below. Am I wrong or is this book answer ...
0
votes
0answers
18 views
Bond worth given yield to maturity
On 18 February 2010, the bonds were issued with a face value of $1,000. The bonds mature in 15 April 2015 and have an annual coupon rate of 6%.
(a) Assuming today is 15 April 2013, how much is the ...
0
votes
0answers
48 views
Find the present value of a ten-year annuity
Find the present value of a ten-year annuity which pays $400$ at the beginning of each quarter
for the first $5$ years, increasing to $\$600$ per quarter thereafter. The annual effective rate of ...
1
vote
1answer
43 views
Find the accumulated value of an investment fund
Find the accumulated value at the end of six years of an investment fund in which \$100
is deposited at the beginning of each quarter for the first three years and \$50 is deposited at the beginning ...
0
votes
1answer
15 views
Find the relative shares of B,C and D in the estate, if it is assumed that the estate will earn a 7% annual eff
Person A leaves an estate of $100,000. Interest on the estate is paid at the end of the year to beneficiary B for the first 10 years, to beneficiary C for the next 10 years, and to charity D ...
0
votes
3answers
48 views
A fund of $30,000 is used to award scholarships…If i=0.09, find the number of scholarships which can be awarded
A fund of $30,000 is used to award scholarships of amount 3000, one per year, at the end of each year for as long as possible. If i=0.09, find the number of scholarships which can be awarded and the ...
1
vote
2answers
55 views
at a nominal rate of interest of 8% converted semiannually…Find the initial amount of the loan.
A loan is to be repaid with level instalments payable at the end of each half-year for $3$ and $\frac{1}{2}$ years, at a nominal rate of interest of 8% converted semiannually. After the $4^{\rm th}$ ...
0
votes
0answers
29 views
Market Clearing Prices: find the set for the valuations
We express Gp=(X U Y, E) is the preffered graph where ij in E if j is preferred seller of X=buyers, Y=sellers
--> A vector of prices p is market clearing if Gp has a perfect matching( generally, ...
1
vote
1answer
86 views
Determine the effective annual interest rate on the loan
A borrower owes \$5000 today and has promised to pay \$1900 at the end of the next three years to repay the loan. Determine the effective annual interest rate on the loan. What is the outstanding ...
0
votes
2answers
53 views
Determine the monthly payments if the nominal rate is 12% converted monthly
a) A $\$50,000$ mortgage is to be repaid by monthly payments for $20$ years. Determine the monthly payments if the nominal rate is $12\%$ converted monthly
b) an extra payment of $\$1,000$ is made at ...
0
votes
0answers
31 views
Find the time and amount of the final payment, if the final payment is larger than the regular payments? Assume i=4.5%
A load of \$1000 is to be repaid by annual payments of \$100 to commence at the end of the 5th year and to continue thereafter for as long as possible. Find the time and amount of the final payment, ...
0
votes
1answer
50 views
European Calls: arbitrage
I have following question, it should be pretty easy, but this subject is still pretty new for me.
Given a market where calls of any strike price can be bought and sold. Assume that the interest rate ...
0
votes
1answer
39 views
Find the total percentage loss over a specified time frame.
If you had an investment and you consistently lost 5% of it per year for 6 years, how do you find the total percentage loss, without knowing the original investment?
1
vote
1answer
62 views
Finding a fix amount payment to payoff multiple credit cards in 24 months
Mr.Debt has 3 credit cards. First card have \$5,000 balance with the rate of 10% compounded monthly. Second card have \$2,000 balance with the rate of 14% compounded monthly. Third card have \$4,000 ...
0
votes
0answers
38 views
On mortagage payment
A mortgage balance of $\$ 9,566.66$ is to be repaid over a 2 term by equal monthly payments at $2\%$ compounded semi-annually. At the request of the mortgagor, the monthly payments were set at $\$ ...
1
vote
0answers
39 views
Interest % and final payment
I dont get these two questions? How should I calculate the answer?
A) Sam intends to retire in 6 yrs. To supplement his pension he would like to receive $\$234$ every 2 weeks for 10 yrs. If he is ...
0
votes
1answer
59 views
annuities and interest
The loan of 30.000 euros is depriciated after 10 years, with equal annuities and interest of 11% of annual capitalization. how can the annuity be determined? -this one seems to be the toughest of them ...
1
vote
1answer
172 views
Converting an Annuity due to Annuity immediate
I'm working on the following problem at the moment while preparing for an exam.
Find the present value of payments of 200 every six months starting immediately and continuing through four years from ...
1
vote
1answer
238 views
How to find Profit percent in this case?
A trader allows a discount of 20% on his goods and still makes a profit of 25%.Find the profit percent made, if he sells his goods at:
(1) the Marker price
(2) at 10% discount
What i've tried:
...
-3
votes
1answer
118 views
How to find cost price in a problem concerning discount?
A dealer is selling an article at a discount of 5% on the marked price.
(1) What is the selling price, if the marked price is 140.
(2) What is the cost price, if the marked price is 12% above the ...
1
vote
2answers
74 views
How to find the original population if it increases with a constant rate?
The population increases by 5% every year. What was the population in 1982, if in 1985 it was 1,85220?
My working:
...
0
votes
2answers
711 views
How to find rate of depreciation in this problem?
The value of a machine is estimated to be 27,000 at the end of 1994 and 21,870 at the beginning of 1997. Supposing it depreciates at a constant rate per year of it's value at the beginning of the ...
0
votes
2answers
1k views
What is the formula for the difference between CI and SI?
if principal, time and rate are given how do i find the difference between Compound interest and Simple Interest?
P=12,000
n=1 and a 1/2 yrs.
R=10% per year
...
0
votes
2answers
391 views
How to calculate CAGR for shares bought at different times?
I have bought shares at following times:
...
0
votes
1answer
36 views
Do I need to calculate the payments of revenue earned as well, for present value?
A service bureau is considering renting a computer for $24$ months at $\$15,000$ per month. The first $11$ months will be required to test software for the particular application to be offered by ...
1
vote
1answer
149 views
Binomial model of stock price
I've got a homework question which I think I have solved but am not certain if the answers are correct. The question goes like this: Consider a stock which has a 50% chance of increasing by 80% by the ...
0
votes
1answer
835 views
Money-Weighted and Time-Weighted Rate of Return
I have a question on Time-Weighted Rate of Return (TWRR) and then a question on the links between MWRR and TWRR,
An investor invested £100 in a fund on Jan 1st 1998 and another £100 on Jan 1st 1999. ...
0
votes
1answer
344 views
recurrence relation on bank interest
Invest 1000 dollars at bank at 3 percent interest compound annually. Every year the bank deducts 15 dollars in charges.
If $A_n$ is the value of the investment at the end of $n$ years write down a ...
0
votes
1answer
631 views
Accounting Question: Computing margin of Safety Ratio
Smith Company produces desk lamps. The information for June indicated that the selling price was $\$25$ per unit, variable costs were $\$15$ per unit, fixed costs totaled $\$6,000$, and the margin of ...
0
votes
1answer
203 views
What is the total inflation rate over a several year period given the each year inflation rate?
Consider a given inflation rates $I_1, I_2, \dots, I_N$ for years $1 \dots N$. What is the total (cumulative) inflation rate over the whole period of $N$ years?
I was trying to chain-link the ...
1
vote
1answer
606 views
Rewriting Dividend Discount Model to derive residual income model
How can I rewrite this equation:
$
\hspace{2in}
V_0=\frac{E_1+B_0-B_1}{(1+r)^1}
+
\frac{E_2+B_1-B_2}{(1+r)^2}
+
\frac{E_3+B_2-B_3}{1+r)^3}
+
\dots
$
into:
$
...
1
vote
1answer
2k views
How to derive Gordon growth model
The formula for the Gordon growth model is:
$\hspace{1in}P= \sum_{t=1}^{\infty} D\times\frac{(1+g)^t}{(1+k)^t}$
So summing the infinite series we get:
$\hspace{1in}P=\frac{D(1+g)}{k-g} ...
1
vote
2answers
245 views
Tricky Finance-related Question
Suppose I have acquired 103,304 customers for a transaction-based business at 12 months into the business and their number has increased at a monthly rate of 40% (from month 1, in which 2,551 ...
1
vote
2answers
189 views
Principal and Annuities
Suppose you want to accumulate $12,000$ in a $5 \%$ account by making a level deposit at the beginning of each of the next 9 years. Find the required level payment. So this seems to be an annuity due ...
2
votes
1answer
166 views
Annuities and Loans
A loan for $8,000$ must be repaid with 6 year end payments at an annual rate of $11 \%$. What is the annual payment? I know that the present value of an annuity with end payments is $\frac{1-v^n}{i}$ ...
