1.

Progressions and Series

Financial Mathematics

Bibliography:
Vidaurri, Héctor M (2017). Matemáticas Financieras Sexta Edición. México: Thompson Learning.
Alhabeeb, M.J. (2012). Mathematical Finance. Estados Unidos: John & Wiley
Guthrie, G. & Lemon, L. (2004). Mathematics of Interest Rates and Finance. Estados Unidos: Pearson.
Progressions (I)
• A progression is a sequence of objects or numbers in which each one
is related to its predecessor by an uniform law. Each object or number
in the progression is called term. For example: 20, 22, 24, 26, 28, 30 is
a progression composed of 6 terms.

Example 1: Compute the first 5 terms and the 25th term of the
progression defined by the following formula:
n−2
an =
n
Answer: -1, 0, 0.33, 0.5, 0.6, 0.9
Progressions (II)
• A series is the sum of the terms of a progression; it is represented as
follows:
S n = a1 + a2 + ... + an

Example 2: Find the first and fourth partial sums of the progression
included on example 1.
Answer: -1 and -0.1667
Arithmetic Progressions (I)
• An arithmetic progression is a sequence of terms where each term
exceeds the preceding term by a fixed difference called the common
difference (d). This is,
an = an −1 + d

• The n-th term of an arithmetic progression is defined by the following

formula:
an = a1 + (n − 1)d
Arithmetic Progressions (II)
Example 3: Given the arithmetic progression 10, 14, 18, 22,…, find the
n-th and 35th term. Answer: 4n+6, 146

Example 4: The first term of an arithmetic progression is 0 and the 20th

term is 190. Find the common difference. Answer: 10

Example 5: How many terms does the arithmetic progression -7,-3,…,

29 have? Answer: 10
Arithmetic Progressions (III)
• The sum of the terms in an arithmetic progression is called arithmetic
series.

• The n-th partial sum of an arithmetic series is given by:

S n = (a1 + an )
n
2
• An alternate formula for calculating the sum of the first n-th terms of
an arithmetic series is:

S n = [2a1 + (n − 1)d ]
n
2
Arithmetic Progressions (IV)
Example 6: Find the sum of all even numbers from 100 to 800,
inclusive. Answer: 157,950

Example 7: The last term of an arithmetic progression with 11 terms, is

zero. If the sum of the 11 terms is 11,000, find the first term and the
common difference. Answer: 2000, -200
Geometric Progressions (I)
• A geometric progression is a sequence of terms in which each term
can be obtained by multiplying the preceding term by a constant
called common ratio. This is,
an = an −1r

• The n-th term of a geometric progression is given by:

an = a1r n −1
Geometric Progressions (II)
Example 8: Find the n-th and 15th term of the geometric progression 7,
14, 28, 56, … Answer: (7)(2n-1), 114688

Example 9: Find the number of terms of the progression:

4 64
5,2, ,...,
5 3125
Answer: 7
Geometric Progressions (III)
• The sum of the terms of a geometric progression is called geometric
series.

• The n-th partial sum of a geometric progression is given by:

a1 (1 − r n )
Sn =
1− r
Geometric Progressions (IV)
• The sum of the terms of an infinite geometric progression is called
infinite geometric series, and it is given by the following formula:
a1
Sn =
1− r

Example 10: The sum of the first 6 terms of a geometric progression is

1968.75. If the common ratio is 0.5, find the first term.
Answer: 1000