§0.
Introduction
The objective of these notes is to present the basic aspects of the mathematics
of finance, concentrating on the part of this theory most closely related to financial
problems connected with life insurance.
An understanding of the...
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§0.
Introduction
The objective of these notes is to present the basic aspects of the mathematics
of finance, concentrating on the part of this theory most closely related to financial
problems connected with life insurance.
An understanding of the basic principles
underlying this part of the subject will form a solid foundation for further study of
the theory in other settings.
The central theme of these notes is embodied in the question, “What is the
value today of a sum of money which will be paid at a certain time in the future?”
Since the value of a sum of money depends on the point in time at which the funds
are available, a method of comparing the value of sums of money which become
available at different points of time is needed.
This methodology is provided by the
theory of interest.
Throughout these notes are various exercises and problems.
The reader should
attempt to work all of these.
Also included are sample questions of the type likely
to appear
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