Financial maths is a field of mathematics that deals with analyzing and solving problems related to finance and investments. Some of the common methods used in financial maths include:
1. Time Value of Money: This method involves calculations based on the principles of interest, present value, and future value, and helps in determining the worth of an investment over time.
2. Risk Analysis: This method involves assessing the potential risk and return associated with a particular investment, and helps in making informed decisions about whether or not to invest.
3. Portfolio Optimization: This method involves designing and managing an investment portfolio that is optimized for a particular set of financial goals and risk tolerance.
4. Monte Carlo Simulation: This method involves generating multiple scenarios of possible outcomes for an investment using probability distributions, and helps in estimating the likelihood of different investment results.
5. Options Pricing: This method involves calculating the fair value of a financial option using mathematical models, which help in evaluating investment opportunities and minimizing risk.
6. Financial Modeling: This method involves creating mathematical models that simulate real-world financial scenarios, and helps in making strategic decisions about investments, financing, and risk management.
Method of financial maths
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