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Financial Mathematics — Revision Notes

CBSE · Class 12 · Applied Mathematics

Financial Mathematics revision notes for CBSE Class 12 Applied Mathematics: 4 topics in quick points. Includes Perpetuity and Sinking Funds, Valuation.

54 questions25 flashcards3 formulas & key relations5 concepts

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Key Topics to Revise

1

Perpetuity and Sinking Funds

  • Perpetuity is an annuity where payments continue forever
  • Present value of perpetuity = R/i (payments at end) or R + R/i (payments at beginning)
  • Sinking fund accumulates money for future specific financial obligations
2

Valuation of Bonds

  • Bond value equals present value of all future cash flows
  • Cash flows include periodic interest payments and redemption value
  • Face value is original issue price; market value fluctuates
3

EMI and Loan Amortization

  • EMI stands for Equated Monthly Installment
  • Two methods: Flat Rate Method and Reducing Balance Method
  • Flat rate calculates interest on original principal throughout
4

Rates of Return and CAGR

  • Nominal rate is stated/announced interest rate
  • Effective rate is actual rate considering compounding frequency
  • More frequent compounding increases effective rate

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Full Notes

Key Concepts

A perpetuity is an annuity whereA fund established by setting asideThe process of determining the fairTwo methods existNominal rate is the stated interest

Frequently Asked Questions

What are the important topics in Financial Mathematics for CBSE Class 12 Applied Mathematics?
Key topics in Financial Mathematics include Perpetuity and Sinking Funds, Valuation of Bonds, EMI and Loan Amortization, Rates of Return and CAGR. Study these first, then practise questions on each for the CBSE Class 12 board exam.
How should I revise Financial Mathematics for the CBSE Class 12 board exam?
Learn the core ideas first, then work through the 54 practice questions on Financial Mathematics. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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All CBSE Class 12 Applied Mathematics Revision Notes

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