Tag Archives: Financial Math

Fast Formulas #1 (Follow-up): New Insight into an Old Formula

Ugarte (Peter Lorre):              You despise me, don’t you? Rick (Humphrey Bogart):     If I gave you any thought I probably would. – Casablanca If you work in finance, I bet there is something you use all the time, but … Continue reading

Posted in Bonds, Fast Formulas, Math | Tagged , , , , , | Leave a comment

Puzzle #6: Treasury Debt

Last week was historic for U.S. Treasury debt.  The yield on the 10-year Treasury dipped below 1.44% to its lowest level ever, and the total debt held by the public* rose to $11,006,251,094,374.26. Some might argue that $11 trillion in public … Continue reading

Posted in Bonds, Economics, Fun, Math | Tagged , , , , | 8 Comments

Fast Formulas #3: Pool Average Life with CPR Prepayments

Fast Formulas #2: Average Life of Mortgage (Amortizing with Balloon) presented a compact formula for calculating the average life of a mortgage that pays as scheduled until it is paid off with a “balloon” payment before the scheduled end of its term.  It occurred to … Continue reading

Posted in Fast Formulas, Math | Tagged , , , , , , , | 19 Comments

Fast Formulas #2: Average Life of Mortgage (Amortizing with Balloon)

Fast Formulas #1: Average Life of Mortgage (as Scheduled) showed a quick way to calculate the weighted average life (“WAL”) of a fixed-rate mortgage that pays as originally scheduled.  I found this formula (which is probably not original) by substituting the standard  level … Continue reading

Posted in Fast Formulas, Math | Tagged , , , , , , | 12 Comments

Fast Formulas #1: Average Life of Mortgage (as Scheduled)

The weighted average life (“WAL”) of a mortgage is the average time until principal is repaid.  It is also the average amount of time that the principal is outstanding.  Recall that for a standard fixed-rate mortgage with level payments, the principal … Continue reading

Posted in Fast Formulas, Math | Tagged , , , , , , | 9 Comments

Puzzle #4: Bond Pricing

Here’s another puzzle I’ve used to teach bond math. It’s not hard, but it requires some understanding of bond concepts that I will explain as we go (I beg the patience of bond mavens). Suppose you are the financial advisor … Continue reading

Posted in Bonds, Fun, Math, Puzzles | Tagged , , , , , , , , , | 12 Comments

Puzzle #3: A Better Answer

Puzzle #3 asked for the weighted average life (“WAL”) of the principal payments for a 30-year mortgage that is cut short by a balloon payment at 15 years. The following information was provided: $100,000 Principal; 5% Interest Rate; $536.82 Level … Continue reading

Posted in Fun, Math, Puzzles | Tagged , , , , , , , | 5 Comments