Simple interest is charged on :
Compound interest is charged on :
Nominal interest is charged :
Annual effective interest is same as
If K is the initial amount deposited in a bank and "i" is the simple interest rate applied for the life time of investment, then the accumulated value of the fund after "t" years will be :
If K is the initial amount of the deposit and "i" is the compound interest applied on the investment, then the accumulated value of the fund after "T" years will be "
if i(m) is the nominal interest rate compouned m times a year, then the accumulated value of 1 after a year will be :
Annuity can be defined as series of payments (equal or unequal) at certain intervals :
An ordinary or immediate annuity has more value than annuity-due
Present value of an investment can be defined as the "discounted-value" of that investment at a certain rate of interest.
Present value of an annuity immediate with n equal payments of K at interest rate i is
Future value of an annuity-immediate with n equal payments of K at interest rate i is :
For the buyer, bonds can be defined as :
The interest paid during the life time of bond is in the form of :
The final lump sum value paid at the maturity of the bond is known as :
Callable bonds can be redeemed before their maturity
Short-Selling is profitable when
If S is the current price of the stock with continuous divident rate d , then forward price of the stock at time t is calculated as :
arbitrage can be defined as :
Bid-Offer spread is :