Mathematics of Finance, Seventh Edition

It is more than 25 years now since the publication of the first edition of Mathematics of Finance, and over 30 years since we started teaching this material. Financial mathematics continues to grow in importance, and this book is an excellent tool to equip yourself with the knowledge needed to operate in a world of growing financial complexity. The effects are everywhere, including the interest earned by a school child in his or her first bank account, the investment earnings of a pension fund, the interest rate charged on a credit card or mortgage loan, or rates in the short-term money market used by multinational corporations. This text is designed to provide readers with a generic approach to appreciate the importance of understanding financial mathematics with respect to a wide range of financial transactions, including annuities, home mortgage and personal loans, bonds, and the assessment of future investment projects. A variety of interest rates are used in the solved examples and in the hundreds of exercises available to the student. While finance and business students at colleges or universities can readily use the text, it is also appropriate for others who wish to gain a better understanding of these issues. A limited level of mathematical knowledge is assumed at the start of the text, thus permitting introductory chapters on algebra to be omitted. Nevertheless, the appendices include detailed explanation of logarithms, progressions, and linear interpolation, which cover the major requirements. The text also includes spreadsheet examples. Spreadsheets are a very powerful tool in financial calculations as they permit complicated models to be developed and many calculations to be completed very quickly. As well, we like to emphasize the use of calculators in problem-solving techniques. However, it is essential that the fundamental principles of financial mathematics be appreciated before any spreadsheet is developed or calculator is used. Our interest in…