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Abstract
This paper examines the application of financial mathematics to the valuation of financial assets, with particular emphasis on present value, discount rates and expected return as core inputs in investment decision-making. The methodology is quantitative, document-based and analytical: classical and contemporary contributions on the time value of money, the risk–return trade-off and bond valuation are reviewed, and a hypothetical case is developed to illustrate the practical use of financial formulae. The analysis shows that the discount rate is not a secondary parameter but the variable that links risk, opportunity cost and asset price. In the applied example, a bond with a 10% annual coupon, a five-year maturity and a required return of 12% yields a theoretical price of 92,790.45 monetary units, below par value, confirming that when the required return exceeds the coupon rate the instrument trades at a discount. The paper concludes that financial mathematics is indispensable to valuation, asset selection and the internal consistency of corporate investment and financing decisions.
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