Some Nontrivial Properties of a Formula for Compound Interest
General Economics
2018-09-28 v1 Economics
General Finance
Mathematical Finance
Portfolio Management
Abstract
We analyze the classical model of compound interest with a constant per-period payment and interest rate. We examine the outstanding balance function as well as the periodic payment function and show that the outstanding balance function is not generally concave in the interest rate, but instead may be initially convex on its domain and then concave.
Cite
@article{arxiv.1809.10566,
title = {Some Nontrivial Properties of a Formula for Compound Interest},
author = {Isaac M. Sonin and Mark Whitmeyer},
journal= {arXiv preprint arXiv:1809.10566},
year = {2018}
}