An Introduction to the Mathematics of Money: Saving and - download pdf or read online

By David Lovelock

ISBN-10: 0387344322

ISBN-13: 9780387344324

This is an undergraduate textbook at the simple elements of private discount rates and making an investment with a balanced mixture of mathematical rigor and financial instinct. It makes use of regimen monetary calculations because the motivation and foundation for instruments of straight forward actual research instead of taking the latter as given. Proofs utilizing induction, recurrence family and proofs through contradiction are lined. Inequalities akin to the Arithmetic-Geometric suggest Inequality and the Cauchy-Schwarz Inequality are used. uncomplicated themes in likelihood and data are offered. the scholar is brought to parts of saving and making an investment which are of life-long sensible use. those comprise discount rates and checking debts, certificate of deposit, scholar loans, charge cards, mortgages, trading bonds, and purchasing and promoting stocks.

The ebook is self contained and available. The authors keep on with a scientific trend for every bankruptcy together with a number of examples and workouts making sure that the coed offers with realities, instead of theoretical idealizations. it's compatible for classes in arithmetic, making an investment, banking, monetary engineering, and similar topics.

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Extra resources for An Introduction to the Mathematics of Money: Saving and Investing

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What is Helen’s IRR? 11. Hugh estimates that he needs $1,000,000 when he retires in 15 years. How much must he have in his current retirement account, which earns $8% a year compounded annually, to reach his goal assuming that he adds no more to his current account? 12. An initial amount of $10,000 is invested for 2 years at successive annual interest rates of 10% and 9% compounded annually. Do you think the future value of this investment is different from the future value of $10,000 invested for 2 years at successive annual interest rates of 9% and 10% compounded annually?

2) on p. 19. Based on the fact that mN = N m, do you think that PmN = PN m ? If so, prove it. If not, provide a counter-example. 33. Show that the EFF of a nominal rate i(m) compounded m times a year is always greater than i(m) for m > 1. 34. Use induction to sum the geometric series that n xn − 1 xk−1 = , x−1 n k=1 xk−1 , that is, prove k=1 where x = 1, for n = 1, 2, . . by induction. (See p. 35. Sum the geometric series k=1 xk−1 , where x = 1, using the following n idea. Let Sn = k=1 xk−1 . Show that xSn − Sn = xn − 1.

If there exists an i for which (a) 1 + i > 0, p (b) k=0 Ck (1 + i)p−k > 0 for all integers p satisfying 0 ≤ p ≤ n − 1 (that is, the future value of all the cash flows up to period p are positive), and n (c) k=0 Ck (1 + i)n−k = 0, then i is unique. Proof. Assume that there is a second solution j of (c), that is, n Ck (1 + j)n−k = 0, k=0 satisfying (a) and (b). Without loss of generality, we may assume that j > i. We first prove, by induction on p, that p p p−k Ck (1 + j) Ck (1 + i)p−k > k=0 k=0 for p = 1 to n.

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An Introduction to the Mathematics of Money: Saving and Investing by David Lovelock


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