An Introduction to the Mathematics of Money - D. Lovelock, etal., (Springer, 2007) WW.pdf - Najnowsze ksiazki(26) - walbo48

An Introduction to the

Mathematics of Money

David Lovelock

Marilou Mendel

A. Larry Wright

An Introduction to the

Mathematics of Money

Saving and Investing

David Lovelock

Marilou Mendel

Department of Mathematics

University of Arizona

Tucson, AZ 85721

USA

dsl@math.arizona.edu

mendel@math.arizona.edu

A. Larry Wright

Department of Mathematics

University of Arizona

Tucson, AZ 85721

USA

lwright@math.arizona.edu

Mathematics Subject Classification (2000): 91B82

Library of Congress Control Number: 2006931194

ISBN-10: 0-387-34432-2

ISBN-13: 978-0387-34432-4

Printed on acid-free paper.

permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York,

NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in

connection with any form of information storage and retrieval, electronic adaptation, computer software,

or by similar or dissimilar methodology now known or hereafter developed is forbidden.

The use in this publication of trade names, trademarks, service marks, and similar terms, even if they

are not identified as such, is not to be taken as an expression of opinion as to whether or not they are

subject to proprietary rights.

987654321

springer.com

Preface

Introduction

Some people distinguish between savings and investments, where savings are

monies placed in relatively risk-free accounts with modest rewards, and where

investments involve more risk and the potential for greater rewards. In this

book we do not distinguish between these ideas. We treat them both under

the umbrella of investing.

In general, income falls into two categories: earned income—which is

the income derived from your everyday job—and unearned income—which

is income derived from investing. You attend college to strengthen your

prospects for earned income, so why do you need to worry about unearned

income, namely, investment income?

There are many reasons to invest and to learn about investing. Perhaps

the primary one is to take charge of your own ﬁnancial future. You need

money for short-term goals (such as living expenses, emergencies) and for

long-term goals (such as buying a car, buying a house, educating children,

paying catastrophic medical bills, funding retirement).

Investing involves borrowing and lending,andbuying and selling.

•

borrowing and lending. When you put money into a bank savings

account, you are lending your money and the bank is borrowing it. You can

lend money to a bank, a business, a government, or a person. In exchange

for this, the borrower promises to pay you interest and to return your initial

investment at a future date. Why would the borrower do this? Because the

borrower anticipates using this money in a way that earns more than the

interest promised to you. Examples of borrowing and lending are savings

accounts, certiﬁcates of deposits, money-market accounts, and bonds.

•

buying and selling. When you buy something for investment purposes,

you are buying an asset from a seller. You expect that this asset will

generate a proﬁt or will increase in value, part of which will be returned

to you. Examples of this are owning real estate or stocks in companies.

An Introduction to the Mathematics of Money - D. Lovelock, etal., (Springer, 2007) WW.pdf

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