ACTSC231 Lecture Notes - Lecture 1: Interest, Sinking Fund, Preferred Stock
24 Aug 2016
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Speeds can be expressed using different units (100 km/hr, 60 mph, 27. 78 m/s, 1 min. /mile, etc. Interest rates are also given using different rates. Chapter 2 equations of value and yield rates. Equations of value (this is mostly covered in chapter 1) Present value (value at time 0) x. Accumulated value (value at time t) y. Interest rate i (plus function for time value of money) Given any 3 of x, y, t and i, solve for the 4th. Regular series of payments (examples: mortgage, car loan, other loans, bonds, insurance premiums, pension benefits) Parameters: pv (or av), payment size, number of payments (including frequency), interest rate. Skip, except 7. 1 common stock and preferred stock. Assets (cash in-flow) needs to pay liabilities (cash out-flow) Immunization (the value of assets and liabilities change when interest rates change, we want to have sufficient assets to cover our liabilities if interest rates change)
