Functions and Graphs, Compounding by Edu Pristine

Author of lecture Functions and Graphs, Compounding

Edu Pristine

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... Equations and inequalities. Functions and graphs ...

... A function is a rule that assigns to every value of x exactly one value of y. Denoted by f(x), x is an independent variable. Domain: all the possible set of values assigned to independent values. Range: set of all values taken by dependent variable. Is defined by its domain together with its action (what it does). Example: f(x) = (x R), function is quadratic. Values shown in bracket specifies range x is independent variable. On substituting various ...

... of an asset to earn interest at periodic intervals. Earning again reinvested to earn further earnings. Effect depends on the frequency with which interest is compounded and the periodicinterest rate which is applied. Example: To what sum does the investment of 10,000 grow in 4 years, given that the interest rate does not vary in the next three years and that the interest is credited to the account at the end of each year? If the rate of interest is 8%. ...

... number of periods in a year, for example for half-yearly n = 2, quarterly n = 4, monthly n = 12, t is the period in years. Example: Calculate the amount after 4 years if Rs. 10,000 is invested in a bank for 4 years. Interest to be credited semi-annually = 136,856. The amount is a bit larger, compared to compounded annually. ...

... so frequently that the time period between interest-rate calculations approaches zero and thus there are infinite number of periods per year. Extensively used in pricing option, future and other derivatives. Calculated using p - amount invested, r - rate of interest, t - time in years. Example: Suppose an investor deposits an amount of 10,000 in a bank ...