ACTSC231 Lecture Notes - Savings Account, Interest, Leap Year

• School: University of Waterloo
• Department: Actuarial Science
• Course: ACTSC231
• Professor: R Keith Freeland

Document Summary

T = 0, we have ! t = 1, we have ! Lenders are willing to lend their money because the borrower pays them a fee(like rent) called interest! Ex if we deposit into a savings account paying 5% interest per year, then after 1 year our acct. bal. will be . We describe this time value using an accumulation function or an amount function. Defn: we de ne the accumulation function, a(t), to be the accumulated value at time t of an investment of made at time 0. ! Note: a(0) = 1and we usually assume the function to be continuous. If the interest rate is positive, then this is an increasing function. Defn: we de ne the amount function, a(t), to be the accumulated value at time t of an investment of made at time 0. !