Interest theory

Author: Xiong Fusheng
Publisher:
Publish Date: 2004-05-01
Features: The main content of this book includes: basic analysis of interest, interest rate, and force of interest; calculation methods of accumulation value and discount value; present value and future value calculations of annuities and cash flows; quantitative analysis of debt repayment; investment yield analysis; detailed models of random interest and interest rate term structure theory, etc. The book is characterized by a complete system, rigorous structure, clear hierarchy, rich content, and strong connection between theory and practice. These features fully reflect the completeness, rigor, scientificity, and applicability of interest theory. The book also features innovative expressions, clear and detailed writing, in-depth yet accessible analysis, and popular and precise explanations. These characteristics not only enhance the financial understanding of readers with a mathematical background in interest theory but also improve the actuarial understanding of readers with a financial, insurance, investment, or financial management background. The book primarily innovates in the following aspects:
(1) It introduces the method of continuous compound interest, analyzes the mechanism of continuous compound interest, discusses the characteristics of various compound interest methods, and compares their advantages and disadvantages, concluding that continuous compound interest is a reasonable and scientific method of interest calculation.
(2) It extends the present value and future value calculation formulas for certain annuities and presents the formulas for various compound interest and payment methods in a more innovative way.
(3) It proposes the innovative concept of "the actual utilization hours of a loan" and discusses related issues.
(4) It introduces a completely new random interest model—the log-gamma distribution and negative log-gamma distribution model.
(5) It establishes several special random force of interest processes, derives some results for the normal distribution model, gamma distribution model, and Brownian motion model of random force of interest processes, and discusses the application of these results in financial analysis.
This book can be used as a textbook and teaching reference for senior undergraduate and graduate students in insurance actuarial science, finance, investment, and financial management at universities. It is also suitable for professionals in insurance, banking, securities, and finance, as well as readers with an interest in the subject.