24
views
0
recommends
+1 Recommend
0 collections
    0
    shares
      • Record: found
      • Abstract: found
      • Article: found
      Is Open Access

      Basis of financial arithmetic from the viewpoint of the utility theory

      Preprint

      Read this article at

      Bookmark
          There is no author summary for this article yet. Authors can add summaries to their articles on ScienceOpen to make them more accessible to a non-specialist audience.

          Abstract

          The main goal of this paper is presentation a modern axiomatic approach to financial arithmetic. At the first, the axiomatic financial arithmetic theory was proposed by Peccati who has introduced the axiomatic definition of the future value. This theory has been extensively developed in past years. Proposed approach to financial arithmetic is based on the financial flow utility concept. This utility function is defined as linear extension of multicriteria comparison determined by the time preference and the capital preference. Then the present value is equal to financial flow utility. Therefore, the law of diminishing marginal wealth utility has been considered as additional feature of the present value. The future value is defined as the inverse of utility function. This definition is a generalization of the Peccati one. The net present value is given as the unique additive extension of financial flow utility. Moreover, the synergy effect and the diversification effect will be discussed. At the end, the axiomatic present value definition will be specified in three ways.

          Related collections

          Most cited references1

          • Record: found
          • Abstract: not found
          • Article: not found

          Perception of anticipatory time in temporal discounting.

            Bookmark

            Author and article information

            Journal
            2013-02-03
            Article
            10.5277/ord120303
            1302.0537
            c87f5f25-ab11-45bf-9491-fa85e15a5f0e

            http://arxiv.org/licenses/nonexclusive-distrib/1.0/

            History
            Custom metadata
            91G99
            Operations Research and Decisions 3/2012 pp 37-53
            q-fin.GN

            General economics
            General economics

            Comments

            Comment on this article