Financial Math for Actuaries, Lecture 3: Loans and Loan Repayment

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Playlist for problems on loan repayment:    • Actuarial Exam 2/FM Prep: Find Loan A...  

(0:00) Loose Ends from Lecture 2 (Annuities).
(11:30) Loans terminology, symbolism, and basic equations
(15:21) OBt (outstanding balance), It (interest paid), and PRt (principal reduction)
(18:51) Amortization schedule
(19:52) Excel spreadsheet
(33:33) Total payments and total interest paid
(35:00) Retrospective Method for the outstanding balance
(38:16) Prospective Method for the outstanding balance
(40:21) Level payment case (simplify the formulas)
(41:41) More formulas related to level payments
(44:41) Level principal payments but decreasing interest payments
(48:30) Sinking funds (only interest until the balloon payment)
(50:36) Outstanding balance as net debt
(51:48) Thinking about interest paid for sinking funds
(52:31) Continuous payment streams (constant interest rate case)
(55:03) CIt (cumulatative interest), CPRt (cumulative principal), differential equation
(57:33) Graphs of these functions

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