compound interest Archives - Infinity is Really Big

January 16, 2019January 28, 2019

Financial Mathematics Terms: Effective Versus Nominal Rates of Interest

One of the most confusing topics for many people when starting to learn about financial mathematics is the various ways of measuring compound interest.

Terms like “effective interest rate”, “nominal interest rate”, “continuous interest rate”, and “real interest rate” show up in various articles and textbooks. Exploring the distinctions and relationships between effective and nominal interest rates is the … Read the rest

January 11, 2019January 28, 2019

Financial Mathematics Fundamentals: Time Value of Money, Interest Rates, and Discount Factors

The word “discount” has the rare ability to cause peoples’ hearts to race for joy.

I certainly get excited when items are on sale, though I am wary of situations where the original price might be high to begin with.

The mathematics of discounts can be confusing for many people. I once had a student who was very fast at … Read the rest

January 7, 2019March 4, 2019

Foundational Tools for Financial Mathematics: Timelines and Equations of Value

Improving your understanding of mathematics and its applications is a multifaceted process.

It is of utmost importance to become comfortable with abstract ideas, symbols, and the mental manipulation of these things. You should know the rules of algebra so well that they become automatic. Furthermore, visual representations of the concepts are often essential to seeing why facts are true and … Read the rest