The Math of Money: Making Mathematical Sense of Your Personal Finances - Hardcover

Davis, Morton D.

Hardcover

ISBN 10: 0387950788 ISBN 13: 9780387950785

Publisher: Copernicus, 2001

Synopsis

This book reflects one mathematician's view of certain areas of economics and finance. It is not a how-to book, it is not exhaustive or rigorous, and it comes with no guarantee of instant wealth. It tries to maximize the use of the reader's imagination and minimize rote calculation. Although some mathematical background is assumed, ordinary high school algebra will usually suffice. Whenever possible, a verbal rather than a mathematical explanation is given, but where formulas serve a useful purpose they are introduced without derivation or apology. We are primarily concerned with concepts rather than applications, so many topics of practical importance are omitted or papered over-we do not worry about taxes, commissions, and fees and we assume an ideal world in which assets can always be bought at the same price for which they can be sold, and where loans have the same interest rate whether you make them or take them. On the other hand, we sniff out paradoxes and anomalies that chal­ lenge our intuition. At the beginning of each chapter we generally pose a few problems that are discussed later in the text. The reader is invited to use his "common sense" to find solutions to these problems. Those who accept the challenge may find their intuition is at odds with the solution more often than they expect. We hope the solutions surprise the readers and whet their appetites for further exploring. Does this mean that the book is of no practical interest? Not at all.

About this title

About the Author

Morton D. Davis is Professor Emeritus of Mathematics at the City College of New York (CUNY) and the author of Game Theory: A Nontechnical Introduction, Mathematically Speaking, and The Art of Decision Making (Springer-Verlag, 1986).

From the Back Cover

Learn how to calculate the math behind your mortgage, the interest rate on your credit cards, the risks youre taking on the stock market...

Making the right decisions about day-to-day finances can be tricky, in large part because the math involved can be just as tricky as the decisions themselves. In a clear and conversational manner, Morton D. Davis describves the equations behind:

Mortgages: Did you know that often 15 years of payments on a 30-year mortgage are mostly paxing off interest, not the loan itself?

Stocks: Calculating investor psychology is important. Stcoks have no greater worth than how much people are willing to pay for them.

Interest Rates: How does compound interest work mathematically? You might guess that a loan shark who asks for 5 percent interest on a one-week loan is charging 260 percent interest per year. Using compound interest, you can show the actual interest rate is more than four times that!

Retirement Funds: How do I save enough money - and keep it - to last for the rest of my life?

Social Security: Does it make sense to delay my payments?


Using entertaining quizzes that test your intuition, easy-to-understand examples, and illustrative tables, The Math of Money explains how to calculate, and truly understand, your financial picture.

Reviews

The mathematically challenged among us might find Professor Emeritus Davis' explanations of interest rates, bonds, and mortgages, among other topics, a bit difficult to penetrate at first. Once a bit of concentration is applied, it's easier to understand why, for instance, borrowing $100 from a loan shark at 5 percent interest per week results in an end-of-the-year invoice of $1,264. The explanations of financial matters, from retirement to options, are deliberately dumbed down, yet made instantly relevant by all the examples. When should you actually retire and draw social security--at age 62, 65, later? What type and length of mortgage is best? And are junk bonds worth the risk? Math made practical using just a smidgen of brainpower. Barbara Jacobs
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Edition details

• Publisher: Copernicus
• Publication date: 2001
• Language: English
• ISBN 10: 0387950788
• ISBN 13: 9780387950785
• Binding: Hardcover
• Number of pages: 204