Interest Rates and the Time Value of Money
Free SOA Exam FM (Financial Mathematics) lesson in Time Value of Money. 22 min read, ~3,304 words.
Compound interest is the FM default,; use simple interest only when explicitly stated. Six rate symbols:,,,. Converting between them is the most tested mechanical skill. Discount factor appears in virtually every FM formula. Under simple interest the effective rate declines,; the simple and compound curves cross at.
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What this lesson covers
- Content
- Example 1
- Example 2
- Example 3
- Example 4
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 1a
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