Introduction to Finance

Discover the fundamentals of finance with a comprehensive exploration of time value of money and discounting. This tutorial begins by explaining why future cash flows are less valuable than present ones, illustrating this with an extreme example. It then delves into compound interest calculations using a numerical example of saving £10,000 at a 10% annual rate over five years. The video further demonstrates how to calculate the present value of future incomes and extends this to finding the present value of a stream of cash flows with varying discount rates. Subscribe to @AxiomTutoringCourses for more insightful finance tutorials.

Learn to simplify complex financial calculations in this video. Discover how to streamline geometric series summation to determine present value efficiently, even with multiple fixed cash flows and discount rates over extended periods. Subscribe to @AxiomTutoringCourses for more comprehensive finance lessons.

In this tutorial, we explore perpetual payments: constant cash flows with an infinite horizon. We derive the perpetuity formula using the limit of the annuity formula as time approaches infinity, yielding C/R. Key application conditions and relation to annuities are discussed. Subscribe to @AxiomTutoringCourses for more comprehensive finance lessons.

Learn how to calculate your monthly mortgage payments with this comprehensive guide. We break down the process step-by-step, starting with a mortgage principal of 1 million pounds and an annual interest rate of 6%. You'll discover how to adjust the annual percentage rate for monthly payments and determine the total number of periods. The video explains how to use the annuity formula to find the exact monthly payment amount. Furthermore, it details how to calculate the principal and interest components of any specific monthly installment, using the 61st payment as a practical example. This essential knowledge will help you understand your mortgage amortization thoroughly. Subscribe to @AxiomTutoringCourses for more finance tutorials.

In this comprehensive tutorial, we explore how to leverage present value, future value, and annuity formulas to effectively plan for savings and retirement consumption. The video walks you through a detailed example of a 30-year-old salaried worker, demonstrating calculations for total accumulated savings at retirement and the annual consumption possible over 20 years post-retirement. We then tackle a scenario where a specific retirement spending goal is set, calculating the required savings at retirement and the necessary annual savings percentage from salary. This detailed breakdown will equip you with the financial planning tools needed to manage your savings and consumption expectations after retirement. Subscribe to @AxiomTutoringCourses for more essential financial and mathematical tutorials.

Learn how to calculate the present values of annuities and perpetuities with constant growth. This video explains how to handle cash flows that increase at a steady rate while still applying a constant discount rate. We demonstrate the manual method of discounting individual cash flows and then show how to derive and apply generalized formulas for both annuities and perpetuities with growth. Understand the key assumption that the discount rate must be greater than the growth rate for the perpetuity formula to converge. Subscribe to @AxiomTutoringCourses for more financial tutorials.

This video tutorial explains how to calculate the present values of annuities and perpetuities when cash flows are growing at a constant rate. We cover both the manual method of discounting individual cash flows and the derivation of generalized annuity and perpetuity formulas for growth scenarios. Learn the crucial condition where the discount rate must exceed the growth rate for perpetuity calculations. Explore the nuances of constant growth in financial modeling. Understand how to apply annuity formulas with growth and the simplified perpetuity formula. Discover why unsustainable growth rates necessitate a return to manual calculation for initial periods. Subscribe to @AxiomTutoringCourses for more financial tutorials.

This video introduces the concept of arbitrage, clarifying that it differs from mere investing or buying low and selling high. Arbitrage exploits mispricing in assets, often generating risk-free profit by effectively producing value from nothing. You'll learn why mispricing occurs, such as when fundamental financial principles are violated. The tutorial then demonstrates how to construct a simple arbitrage portfolio through a practical example involving differing discount rates, illustrating how to achieve a positive cash flow with zero initial net investment. The video details an example where a two-year discount rate is lower than a one-year rate, violating the fundamental principle that a dollar today is worth more than a dollar tomorrow. This specific mispricing allows for the construction of an arbitrage portfolio by borrowing at the cheaper two-year rate and simultaneously lending at the higher one-year rate. This strategy results in a guaranteed future profit without any initial cash outlay. Alternatively, the video shows how to achieve an immediate positive cash inflow at time zero without any future repayment obligations. The discussion consistently emphasizes that genuine arbitrage stems from asset mispricing, not simply an increase in asset value over time. Subscribe to @AxiomTutoringCourses for more insights into financial concepts.