Definition of Financial Mathematics

The mathematics is one of the logical deductive sciences older that deals especially with the properties observed by abstract entities and also of the relationships that are established between them in order to develop calculations, accounts and measurements.

Branch of mathematics that deals with addressing financial issues and the value of money to find the best investment alternative

Mostly, it is a science that works with numbers, geometric figures and symbols.

Meanwhile, the financial mathematics is a branch within mathematical science that deals exclusively with the study of the value of money over time and financial operationsIn other words, it is nothing other than the application of mathematics in the field of finance in order to, for example, elucidate which is the best option when investing.

By studying the value of money over time and combining issues such as capital, rate and time, you can achieve an interest or return and then, various methods of evaluation put into practice they will tell us what is the best investment decision to make.

Objectives and resources

Basically, financial mathematics will focus on calculating the value, interest rate or profitability that the various products that exist can provide in financial markets, such as bonds, deposits, loans of any kind, paper discounts, insurance calculations, stocks, among others.

It will be essential to approach the following tools, which are governed by the support of this branch of mathematics, such as simple interest and the compound, the temporary income, the future and the present value, the infinite income, the constant and increasing, the loans and the table of amortization.

The investments They are the pillar on which this part of mathematics is based, while investment is an action that is carried out in order to achieve a profit or a benefit.

The investment will always imply a monetary outlay that is equivalent to a figure to achieve an amount of greater value in exchange.

Good investment is the goal

Investments are undoubtedly the most common practices in market economies and are those that allow the mobilization of resources with simplicity and ease from sectors that are less productive to others that are more.

This procedure is specially studied through the capital market, which will focus on the achievement of a profit, and in avoiding under any slogan, a loss of the investment effected.

By case and to achieve this is that certain strategies are put into practice.

One of the most common is that of analyze the intrinsic value of an asset.

For example, shares change their values ​​in the market according to different situations.

There are seasoned professionals who are dedicated to following these changes and evaluating the price of the actions, according to parameters and patterns that occur, for example, throughout the follow-up one year.

Another issue that is central to the interest of this branch is the capital increase of a company and implies precisely any type of increase in the social capital, either investment of money in the company, or the capitalization of reserves.

App

It should be noted that financial mathematics is closely related to theaccounting, since the information it takes to carry out its evaluations is precisely that which has been duly recorded in the accounting books.

They are also a invaluable ally of the politics, since he attends the Politic science in solving economic problems originating in society.

Its application is eminently practical.

To better understand its scope, it will also be necessary to shed light on the concept of financial operations, which turns out to be the replacement of one or more capitals by one or more than one that is equivalent at a different time, from the implementation of a law financial

Topics in Financial Mathematics