Preface of the second supplemental edition
The first edition of the 2017 book “Introduction to Financial Mathematics” could not meet the demand of interested users. In the preface of the first edition it is noted that on the basis of volume, complexity, topicality and innovativeness, the book has characteristics of a university textbook. The book has been used for literature by undergraduate and postgraduate students and professors who have financial mathematics in their curriculums.
The second edition of the 2018 book, supplemented by the Deposits chapter, has three chapters:
(1) Interest account with application,
(2) Deposits and
(3) Repayment of loans.
All examples in the book were done in Excel 2016. Comparative work on examples of the first edition of the book using a calculator was retained with 12 characteristic examples created in Excel 2010, on 24 sheets and 4 multimedia courses. In the supplemented chapter Deposits, all examples were done in Excel, where the use of calculators was omitted as an irrational and outdated procedure.
The authors of the book’s first edition have, together with dr. Husnija Bibuljica, done additional research for the second edition of the book, such as:
(1) determining the period and length of time intervals for the required transactions,
(2) determining the amount of primary loan sizes for any repayment period and
(3) creation of loan repayment plans for any total number of capitalizations (n> 0), where (n) is a real number in decimal form.
The previous and aforementioned additional research with Dr. Husnija Bibuljica can be used, among other things, in electronic banking, for the conversion and consolidation of loans and for the offer and choice of loan repayment models.
Each Excel example has adequate spreadsheets for calculations with equivalent amounts of input sizes based on the created example. The calculations are provided as examples for practice, application and improvement of example creation in Excel. In calculating the amount of output values, the introduced functions (formulas) were used in explicit form, and for the conditional transitions in the repayment of loans, the Excel logic function (IF). Excel’s financial functions were not used, and the introduced functions were not hidden, which is suited for practice, application and promotion according to the needs of the practice.
In the first column of the Excel spreadsheet, the names and labels of the required quantities are entered, with a special mathematical form for the formulas from which Excel equivalent formulas are derived, for calculating the amounts of nested and output values. No additional programming was needed as the relationships and formulas were researched and introduced in logical order in theory and examples. The examples made in Excel, among other things, are intended to be compared with the creation of examples using a calculator. In this case, Excel, with its capabilities, suppresses the use of calculators. It is not advisable to change the input values of the created examples. In calculations reserved for exercise, application, and calculation enhancements, book users can change the input sizes, which cells are marked by the authors in yellow and the output cells in green. In excel, some typical loan repayment plans have histogram, graphic schemes of the primary loan values, for period of decursive capitalization.
The examples done in Excel are on the official websites of the authors of the book, in the folder: “Introduction to Financial Mathematics, Second Supplemental Edition”, with three workbooks; 01 Interest account with applications, 02 Deposits and 03 Repayment of loans.
You can download the examples made in Excel here.
Authors’ official websites:
Sc.D. Sead Resic www.seadresic.com
Math Prof. Salih Mesanovic www.salihmesanovic.com
Web pages are available for downloading created examples in Excel and for communicating with book’s authors.
Four multimedia courses from the first edition of the book were published on the Salih Mesanovic’s YouTube channel. Links to multimedia courses and 12 distinctive examples done in Excel 2010 are also available on the book’s authors‘ web sites.
Both editions of the book, with examples created in Excel, are, among other things, an introduction to financial modeling for solving various current financial problems in practice.
Tuzla, 2018