Financial Mathemati cs

By
Ghulam Nabi
 §1f. Power Series
• Using the relationships between i, d, and δ, any
of these rates can be expressed as a power
series in any of the others.
• However, there have been very few (if any)
questions on the FM/2 exam in recent years
that depend on your knowledge of series
expansions.
• But just in case, let’s review a few of these
power series.
• You probably remember the following series
expansions from calculus:

• Please be very careful with the second series.

Note that the expansion of ln(1+ x)
(i) starts with x, not 1
(ii) has alternating signs