Valhalla Legends Archive

These moderators love to delete my totally relevant, non-flaming, factual posts.  Oh gee, I wonder why.

Quote from: Yoni on March 03, 2006, 07:35 PM
What?! No!!!
Rule, the page you linked is stupid. (Yes, if banks work that way, they're all stupid.)

The formula they specify is:  FV(n)   =   P(1 + r/n)^(Yn)

According to that formula, if the yearly interest rate is 10%, and you pay quarterly instead of yearly, the quarterly interest rate becomes 2.5%! (0.1/4...)
That is clearly bullshit.
Interest rates are exponential. The interest rate should have become 1.1^(1/4) = 1.024.., or 2.4%.

Then, the correct formula becomes  FV(n)   =   P[(1 + r)^(1/n)]^(Yn)
If you calculate based on that assumption you will notice that continuous and discrete interest rates are the same.
(It's easy to notice that the n actually cancels out in the above formula... FV(n) is not dependent on n!)

Yes, I assert that banks give you too much money because some idiot considered exponential interest rates as linear.

(You might want to listen to Rule instead of me if you want to get a good grade btw)

See? Thank you.  Rarely anybody (if anybody) uses continous compound interest.

Thanks moderators, you deleted my humorous post.

Anyhow, it is rediculously to assert that it isn't a weapon ... its a knife.
However, in the early church, Christians were persecuted.  Times were also different, it's not like they had the national guard or the police ... some of them even had body guards.   It makes sense that they carried some sort of weaponry.  I hear some of the early Catholic bishops were trained militants.

Quote from: Rule on March 02, 2006, 11:25 AM

Quote from: Glove on March 02, 2006, 11:18 AM

Quote from: Rule on March 02, 2006, 12:47 AM
I don't think it is.  It is if interest is actually compounded only every year.  In almost every case, this is not so.  For example, if you invested $50000, you would probably have accumulated interest on it after a day, or a month, or two months.  The formula Yoni derived would suggest that your $50000 stays at exactly $50000 until after a year has passed.  This could very well be what was intended if it is some sort of obscure investment.  I would confirm, however, that they are not talking about expected gain of continuously compounded interest, compounded at a rate 'r = 10%' for a year.

Anyways, your total would be
1,004,276.85   if it is.

Too bad continuously compounded interest is not used often.  It would be faster to grow money since at every moment it is growing (rather than every month, quarter or year).

Which is why it is often used.  Think about it.  Interest rates are a lot higher on loans than on deposits in banks and on most investments.

I have some understanding of the actuarial sciences.  It is rarely used there.  In fact, when I took an interest theory course, it wasn't even discussed.

Quote from: Rule on March 02, 2006, 12:47 AM
I don't think it is.  It is if interest is actually compounded only every year.  In almost every case, this is not so.  For example, if you invested $50000, you would probably have accumulated interest on it after a day, or a month, or two months.  The formula Yoni derived would suggest that your $50000 stays at exactly $50000 until after a year has passed.  This could very well be what was intended if it is some sort of obscure investment.  I would confirm, however, that they are not talking about expected gain of continuously compounded interest, compounded at a rate 'r = 10%' for a year.

Anyways, your total would be
1,004,276.85   if it is.

Too bad continuously compounded interest is not used often.  It would be faster to grow money since at every moment it is growing (rather than every month, quarter or year).