đ Lesson 1: Introduction to Financial Mathematics
đ§ What Is Financial Mathematics?
Financial mathematics applies mathematical techniques to solve problems in finance. It helps us understand how money grows, how investments work, and how to make smart financial decisions.
Whether you're managing personal finances, analyzing investments, or working in banking, financial mathematics gives you the tools to:
- Calculate interest and returns
- Evaluate risk and reward
- Optimize financial strategies
đĄ Why Learn Financial Mathematics?
Mastering financial math empowers you to:
- đ Understand compound interest and how your savings grow
- đł Compare loan offers and credit card rates
- đŚ Evaluate investment opportunities like stocks, bonds, and ETFs
- đ Make data-driven financial decisions
đ˘ Key Concepts You’ll Explore
| Concept | Description |
|---|---|
| Simple Interest | Interest calculated only on the original principal |
| Compound Interest | Interest calculated on both principal and accumulated interest |
| Time Value of Money | The idea that money today is worth more than the same amount in the future |
| Present & Future Value | Tools to evaluate investments and savings over time |
| Annuities | Series of regular payments or receipts over time |
đ Real-Life Example: Simple Interest
Let’s say you invest $1,000 at a simple interest rate of 5% per year for 3 years.
đ Practice Task
Try this yourself:
You invest $2,000 at 4% simple interest for 5 years.
- What’s the total interest earned?
- What’s the final amount?
đ What’s Next?
In Lesson 2, we’ll explore compound interest—the powerful force behind long-term investing and wealth building.
Profmhd
I am passionate about AI and Cybersecurity, motivated by technology and basic science. My interest in mathematics, chemistry and physics marries with my curiosity for new technological developments. The United States is an inspiration to me, and I aspire to contribute to global progress in these fields while exploring the world through travel.
