AMA530Mathematics of Finance

AMA530Mathematics of Finance
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Mini-project(Group)Objectives:The objectiveof thismini-projectistousecompound interest(CI),spotrates,yieldcurve,bondpricingandotherpossibleinteresttheoreticalanalysistoinvestigateandcomparefinancingplans.You should useyour writingskills,learnedinterestterminologies,and formulas toclearlycommunicate yoursuggestedfinancingresolution.Role:You arethefinancialconsultantforsomefirmstoseekpossiblefinancingplan.Such firmsareinneedof financialadvicebutnotsurewhichisthemostappropriatefinancingstrategy.Situation:Supposeyouarehiredasafinancialconsultanttohelpsomefirmstoraisingmoneyfrommarket,anddeterminethebestoptionsfortheirfinancingplans.Utilizingyourinteresttheoryknowledge,youneedtoconvincethefirmsofthebestoptionfortheirfinancing.Scenario:Supposeyoucanaccessthepossiblefuture(expected)cashflowfromfirms’sbasicbusinessoperations(i.e.,the firmsfixedor random incomes in next30 years);you can alsoobserve thecurrentmarketbondpricesinnext30years(butforotherfirmsorgovernments);also,youalsocangetknownthebasiclendingratesfrommainbusinessbanks(forpossibleamortizationorsinkingfundmethod).Hints:You may suggestchooseborrowingmoney frombank usingamortizationorsinkingfund(inthiscase,thefirmswillpay someinterests),orissuesome bond inmarket(inthiscase,thefirmswillpaysomecoupons).Remarks:This mini-projectisopen for allpossible solutions,no fixed answer and youare freetoproposeyoursuggestionorshowyourideas.Twosingle-sideA4pagesarelimited(thereby,pleasefocusonyourbasicidea,bluepicturewithminimalnecessaryjustificationsonly).Due date:6:00pm, Dec.1,2023.Group work with members signatures (the group size shouldnomore than8students;individualwork withsinglepersonisalsoacceptable),submittedviapolyuBB.

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