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On the Values of Annuities, which are to pay Certain given Rates of Interest on the Purchase Money During the Whole Term of Their Continuance, and to replace their Original Values, on their Expiration, at Certain other given Rates

Published online by Cambridge University Press:  28 May 2015

Peter Hardy
Peter Hardy*
Affiliation:
Institute of Actuaries of Great Britain and Ireland, and London Assurance Corporation
*
London Assurance Corporation, 7, Royal Exchange
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Extract

Notwithstanding the very large amount of leasehold property, which in the course of every year is bought and sold in this country, and notwithstanding the extensive transactions—of almost hourly occurrence—in the public market, in Government and other temporary Annuities, the subject of the rate of interest which any given purchase will yield the buyer is very imperfectly understood, even by those most deeply interested in the inquiry, unless they happen to be at the same time well versed in actuarial computations.

It is not unfrequently imagined by a buyer, that if he purchase a leasehold property or a temporary Annuity at a price corresponding with the value of an Annuity at a given rate of interest, (say 5 per cent.,) that he has made a purchase which will pay him 5 per cent., or which, in other words, will enable him to spend 5 per cent, per annum on his outlay, and at the same time replace his capital undiminished at the expiration of the term.

Type
Research Article
Information
Transactions of the Institute of Actuaries , Volume 1 , 1849 , pp. 1 - 8
Copyright
Copyright © Institute and Faculty of Actuaries 1849

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References

page 3 note * It is, however, due to Mr. Benwell to state, that his work above referred to distinctly treats the subjects now under consideration, but in a style so little happy, and so involved, that the merit of the actuary is apt to be overlooked in the obscurity of the writer. Mr. Benwell, moreover, computed some tables of a character similar to those appended to this Paper; two of the columns in Table of his little work are identical with Value columns 7 and 11 in the accompanying table; which table was, however, independently calculated, indeed, I never saw Mr. Benwell's book until the present Paper had been written for some weeks, and was actually in type.

page 3 note † See an Account of this Lecture in the Post Magazine for 10th March, 1849.