StudentShare solutions

# Quantitative Finance Analysis - Term Paper Example

## Extract of sample Quantitative Finance Analysis

It is important to note that the influence of using highly specialized quantitative techniques is on an increasing trend mainly due to its ability to provide inferential statistics. The results are inferred in a highly précised and accurate manner, which lead the quantitative analysts to sort out the different aspects attached with the behavior of a financial decision. This report highlights various kinds of scenarios in which the specialized quantitative techniques are applied in order to sort out the behavior of the financial decision taken under that scenario. Specialized techniques such as regression, correlation, NPV, IRR, yield to maturity, annuity, etc are utilized to analyze the different scenarios.
Net Present Value
Background Information
This question inquires about the viability of an investment opportunity such that the opportunity requires \$10,000 to be invested today. The cash inflows from this opportunity will be derived in such a way that \$500 will be received after one year, \$1,500 after two years and \$10,000 after ten years. With reference to the particular technique of Net Present Value (NPV), the viability of this opportunity is asked whether the opportunity is attractive if interest rates are 6% and 2% respectively.
Theoretical Background Net Present Value (NPV) is the technique, which mainly works on the concepts of time value of money. According to time value of money, the money received in future time does not have the same worth, had that money received today (Brigham et al, 2010 pp. 380-81). If that future money is brought back today, it would have lesser worth. NPV is the technique that works on the basis of cash flows such that the initial investment is deducted from the discounted cash flows. The resulting answer provides the estimated amount of benefit earned or loss incurred in case of opting the investment opportunity. In case if the NPV is found to be positive, it means, that the investment opportunity is financially viable and hence should be accepted. In case of negative NPV, the investment opportunity is not up-to-the-mark and it should be rejected. Computation Years 0 1 2 10 Investment (10,000)   Cash Inflows 500 1,500 10,000 Discount Factor (6%) 1.0000 0.9434 0.8900 0.5584 Discounted Cash Flows (10,000) 471.70 1,334.99 5,583.95 NPV (2,609.36)       Years 0 1 2 10 Investment (10,000)   Cash Inflows 500 1,500 10,000 Discount Factor (2%) 1.0000 0.9804 0.9612 0.8203 Discounted Cash Flows (10,000) 490.20 1,441.75 8,203.48 NPV 135.43       Interpretation From the above stated results, it can be observed that if the interest rate is set to be 6% to discount the later coming cash inflows, it would result in negative NPV of \$2,609.36. Since the negative NPV states that the investment opportunity is not attractive enough to be accepted, therefore it should be rejected. On the other hand, if the interest rate is trimmed to only 2%, it will generate positive NPV of \$135 from the same cash flows. This positive NPV reflect that the investment opportunity is financially viable and it should be accepted. Question 2 Present Value Annuity Background Information This question pertains to annuity such that a house is to be purchased on mortgage basis. The actual cost of house is \$350,000. However, the buyer is willing to pay \$50,000 as down payment. For the rest of \$300,000 the buyer wants to pay the amount along with the interest payments in next 30 years at 7% interest per annum. The buyer wishes to pay loan in 30 equal installments, which should include principal amount ...Show more

## Summary

There are certain techniques that investigate the reasons, patterns and specific behaviors of a previous financial decision whereas some techniques are designed to judge whether a future investment opportunity is worthwhile for the entity to encounter. …
Author : gerholdcrystal
Save Your Time for More Important Things
Let us write or edit the term paper on your topic
"Quantitative Finance Analysis"
with a personal 20% discount.
Grab the best paper

### Check these samples - they also fit your topic

Quantitative Marketing. Data Driven Marketing
In this case, it means that only a hundred people will buy thus giving a total of \$40,000 per year. When the same is sold at \$275, 30 percent of the five hundred people are willing to buy. In this case, 150 people will buy the subscription thus giving revenues of 41250.
10 pages (2500 words) Term Paper
International Finance
It as well studies international ventures, international funds and investment flows, and trade shortfalls. It incorporates the study of future options as well as currency swaps. Exchange rates influence the international trade within a free market structure that facilitates to keep a balance of trade and balance of investment.
7 pages (1750 words) Term Paper
ABBREVIATED QUANTITATIVE RESEARCH PLAN
ABBREVIATED “QUANTITATIVE” RESEARCH PLAN [Your name here] [Name of university] [Due date of paper] Introduction It is a fact that stress pervades many areas of life. Whether it is stress from relationships, school, work, or social environments, research has shown that it can have a harmful impact on mental health, productivity, physical health, performance, and decision-making ability.
8 pages (2000 words) Term Paper
Finance
The debt financing includes bonds, leasing, borrowings from bank and mortgages and is universally seen as the easiest and cheapest way of financing activities. It also carries a tax-deductible benefit that is an attractive source in investing activities as interest payments will be expensed out.
5 pages (1250 words) Term Paper
International Finance Management
These currency rates are set on preferences of individual governments. Some governments prefer appreciation, whereas export oriented economies such as Japan
42 pages (10500 words) Term Paper
International Finance
Exchange rates influence the international trade within a free market structure that facilitates to keep a balance of trade and balance of investment. Such as a skewed change rate can create a businesss exports
7 pages (1750 words) Term Paper
Quantitative Methods Exam Paper
When a sampling plan is complete and exhaustive all the items in a population will be fully represented. The analysis and the outcomes of such analysis will be appreciative of nature. c. Free from error
4 pages (1000 words) Term Paper
Quantitative research
Quantitative research refers to the traditional scientific method involving objectively gathering data in a systematic, organized and controlled manner so as to generalize the findings to other populations. Therefore, quantitative research design
2 pages (500 words) Term Paper
Analyze the def-14a by JPMorgan of advanced corporate finance
since 2004 to 2005, has worked at high positions in different entities previously, including serving as a chief risk management officer before her job in JPM. She has had a good experience in the field hence quite an experience in the field in addition to her academic
2 pages (500 words) Term Paper
Finance
Therefore, investors should take the advantage of the cheaper source of funds. On the other hand, investments should be made in Chile
4 pages (1000 words) Term Paper
Click to create a comment
Let us find you another Term Paper on topic Quantitative Finance Analysis for FREE!