Compound Interest/Discount Example (Actuarial Exam FM–Financial Mathematics–Module 1, Section 6)



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SOA Exam FM (Financial Mathematics) Module 1, Section 6 Example

After completing this video you should be able to:
– Define and recognize the definitions of the following terms: discount rate (rate of discount).
– Given any one of the effective interest rate, the nominal interest rate convertible monthly, the effective discount rate, the nominal discount rate convertible monthly, or the force of interest, calculate any of the other items.

Example used in the video:
An account credits interest using a 9% interest rate compounded monthly for the first year and an 8% discount rate compounded quarterly for the second year.

Determine the accumulated value after two years of a deposit of 1000.

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