The financial mathematics, refers to the application indicated in the mathematics of finance that focuses on the study of the valuation of money for a time, in conjunction with capital and the rate, in order to obtain an interest or return, through different evaluation strategies that facilitate decision-making in relation to an investment, budget or adjustment economic.
These are directly related to accounting, due to the support of reasoned information that is produced through accounting records. Being auxiliary tools of political science, they help to study and solve problems that are directly related to society and daily life within the area of business.
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In this article you will find:
Financial Mathematics Goal
Your goal is analyze, assess and perform calculations of different matters related to the financial market, especially if it is about the value of money over time.
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This application deals with calculating the value of shares or calculations on insurance, bonds, paper discounts, the profitability or the interest rate of the various products that are in the financial market as a deposit, among others.
They have the ability to focus on studyingio of the valuation of the rate, capital and time that requires obtaining the interests, to carry out this study, you need various tools that achieve probability, statistics and differential calculus.
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What is financial mathematics for?
It can be said that it is one of the branches of applied mathematics that has the purpose of analyze, project and assess the relative concepts within the financial market, aiming at the basis of the economic value of money at various times, therefore, it serves to:
- Calculate the different interest rates, loan profitability or for projects.
- Take into account the knowledge of a certain project.
- Projecting an amount of money into the future or into the past with the intention of knowing the equivalence it has in two different times.
- Study and carry out various loan repayment tables.
The knowledge of the real value of money at two different times, is the main objective of this system, since it is based on the equivalence of capital, an interest rate and the cost or rate timely.
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Study base of financial mathematics
The study base can be classified as follows:
Capital
For the investment to be effective, you must have knowledge of liquid and financial capital as part of the money available. However, capital could be part of a resource that can be used for the formalization of goods or for the operation of an appropriate system.
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In a company, capital has been all kinds of assets that are involved in the value line that can transform a product or the presentation of a certain service.
Interest and interest rates
When looking for an investment, the interest rate should be the expected rate on the investment and is advisable to take into account various return proposals to be able to make the investment adequate.
As a general rule, the return on an investment should always be expressed by a variable rate that is monthly or annual. In case the investment has a fixed rate of return, they can only be offered by the government through financial institutions in certificates of deposits on terms or also in bonds of the treasure.
In the event that an investment is achieved that contains a fixed rate of return, a detailed analysis, as there is a possibility that it could be a scam or an investment scheme with little probabilities reliable.
Time
This is usually the most obvious part and the easiest to understand, since it is understood when it is necessary that a certain banking analysis of various investment proposals must be carried out.
For this reason, it is extremely important to have the minimum control of the various interest rates and the different interest rates, in this way you can be sure of being able to express the returns that the different investment alternatives can offer within the same period of weather.
It is necessary to know what the investment performance has been in the last year, the expected return for the month and what alternatives are the most convenient for said performance.
Advantages of financial mathematics
Among the most relevant advantages of this application will allow:
- Create monthly budgets that are based on the level of income and expenses.
- Know when decisions have to be made or not that are convenient.
- Know what are the appropriate investments to make a decision.
- Analyze which bank offers the best rate and the appropriate conditions.
Importance of financial mathematics
Taking into account the business market, where financial decision-making is quite frequent, it is very important that dominance over the value of money in time, annuities, net present value, interest rate and internal rate of return, between other
These elements make up the factor that determines the development of organizations, since it is quite common the use of credits, the analysis of investment projects and knowledge of the market financial.
Its importance is due to the fact that anyone can carry out financial operations in banks, what would be perfect to have the basic arguments for a good management of personal finances.
Its purpose is obtain the necessary bases and tools, to analyze in detail the credits and the opportune investments that are obtained within the business system. In general, it is a very simple study that works on the calculation of present and future values, the interest rate, their equivalences, among other concepts.
