mathematics of finance

Mathematics of finance involves using formulas and models to understand and manage money, investments, and loans. It includes concepts like interest—how money grows over time—whether simple (earned on the original amount) or compound (earned on accumulated interest). It also covers the present value of future cash flows, helping assess how much future money is worth today. These tools aid in making informed decisions about saving, investing, and borrowing, by quantifying risk and potential returns. Overall, it provides a structured way to analyze financial options and plan effectively for the future.