How to Calculate (small) delta? Continuous Annuities.

Hello!

I am currently stuck on what is probably a very simple question. When we are working out annuities the denominator is either i, d or δ, but for the life of me I cannot find the formula to work out delta. All the examples print the symbol and then jump straight to the answer (probably because it is such a simple calculation!). A good example question is Q7.6 on p.154 of the CMP for CT1, if I have been unclear and writing up this example would help let me know!

Thanks in advance,

Daniel

 

delta = ln(1+i) = -ln(1-d)
Or lookup in tables for common interest rates

 

Good point made above. Do make sure you have a copy of the Formulae and Tables that you will get given in the exam. If you do have memory failure in the exam and are working in interest rates that aren't tabulated there are formulae in there (and not only compound interest).

These tables don't come in the CMP pack. You can buy them at actuaries.org.uk

 

Thanks a lot for your help!

Daniel