Actuarial Science

Actuarial Science

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This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1898 edition. Excerpt: ... so accurate as that just found, is simpler and more easily applied and may in most cases be adopted. Indeed, without going through this calculation at all, it is sometimes sufficient to ascertain the nearest corresponding annuity value from the tables, and, assuming that the difference in values is proportional to the difference in the rate of interest, find an approximation to the required rate by simple proportion. A very common application of the foregoing formulae poTMStof occurs in connection with Foreign Government Loans. moLoana6TM" These very frequently are issued at a discount, but are redeemed at par by means of an accumulative sinking fund set aside annually for this purpose--bonds to the amount of the sinking fund being drawn and cancelled. Of course bonds drawn within the first year or two will show a much greater Chap, vi. Rate of Interest Yielded. 49 return than those which are not repaid till the loan has almost expired, and it is impossible to say in the case of any individual bond what the return may be. The rate of interest which the loan as a whole will return to the investors can, however, easily be calculated as follows: --Let p = the price of issue per unit, j = the rate of interest per unit of its par value which the loan yields, /"=the sinking fund per unit of par value which is annually provided, and which, along with the interest saved on the bonds previously cancelled, is employed in paying off the bonds as they are drawn, = the rate of interest realised by the investors in the aggregate. The first step is to ascertain the duration of the loan, i.e. the number of years that will elapse before all the bonds are drawn and cancelled. Now it is clear that to employ the sinking fund together with more

Product details

  • Paperback | 24 pages
  • 189 x 246 x 1mm | 64g
  • Miami Fl, United States
  • English
  • black & white illustrations
  • 1236556305
  • 9781236556301