MATH 424 Study Guide - Quiz Guide: Interest, Novella, Loan
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# of days / 360: assume each month has 30 days, approx. 1 + (cid:1861) = (cid:1857: = ln (1 + (cid:1861)) a(t) = (cid:1857) (cid:3116, force of interest: = (cid:4666)(cid:4667)(cid:4666)(cid:4667) = ln (cid:4666)(cid:4667, ma(cid:396)(cid:272)el"s i(cid:374)flatio(cid:374) adjusted (cid:894)(cid:862)(cid:396)eal(cid:863) i(cid:374)te(cid:396)est (cid:396)ate(cid:895) = j 1+j = (cid:2869)+(cid:2869)+ r = inflation rate. Interest crediting governed by accumulation function a(t) and discount function v(t) (cid:4666)(cid:3051)(cid:3289)(cid:4667: stop when ((cid:3041)+(cid:2869) (cid:3041) ) = 0 to the desired decimals, i(cid:374)gle pay(cid:373)e(cid:374)t (cid:862) c = (cid:863) at ti(cid:373)e (cid:862)t(cid:863) is e(cid:395)ui(cid:448)ale(cid:374)t to { } at time { , approx. ] / c: assu(cid:373)e i(cid:373)ple i(cid:374)te(cid:396)est at rate (cid:862)j(cid:863); a = bal at bop; b = bal at eop; c = (cid:3041)(cid:2869, i = j . (cid:4666)1 (cid:4667) (cid:3041)(cid:2869: assume c = (cid:3041)(cid:2869) +(cid:2869)(cid:2869) (cid:1862)(cid:3050) = yield rate for the interval [0, t] ](cid:2869)/ (cid:1861)(cid:3050) = yield rate for the interval [0, 1] and the net contributions take place at time k: approximate dollar-weighted yield j =
