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economics/fin math

Author
Spiderman Blitz
Pator Tech School
Minmatar Republic
#1 - 2012-03-14 08:22:02 UTC
I ran into this when I was looking at IRR: I figure that it might be faster to brute force this sort of problem than to try to solve a general case. Does that sound right?

Also, do you need geometry for econ/fin math?
Florestan Bronstein
Ministry of War
Amarr Empire
#2 - 2012-03-14 11:03:43 UTC  |  Edited by: Florestan Bronstein
Spiderman Blitz wrote:
I ran into this when I was looking at IRR: I figure that it might be faster to brute force this sort of problem than to try to solve a general case. Does that sound right?

(a) IRR sucks. Use net present value (NPV).
(b) there is no general solution to the IRR equation - numerical methods (what you call brute-forcing) are the norm for everything but the most simple cases. Also note that you might get multiple solutions (of which only one makes sense) or no real solutions at all. IRR sucks.

Spiderman Blitz wrote:
Also, do you need geometry for econ/fin math?

depends on your understanding of "geometry" - some Linear algebra is required but if you ar referring to the "constructing stuff with compass & ruler" kind of geometry the answer is "no".

Financial maths and economics are not interchangeable.
At least in my country Financial maths is a a full maths degree (usually maths B.Sc. and Financial maths M.Sc. on top of it) with all that entails. You will spend a lot more time deriving proofs for underlying principles than learning about their application.
Finance as an economics specialization on the other hand requires very little "actual" maths and is mostly focused around the interpretation/application of theorems/concepts derived by mathematicians.
Of course there is some overlap - but both subjects approach similar problems from very different angles:
In economics the professor shows you a formula and talks an hour about its interpretation and the intuition behind the econ model it represents.
In mathematics the professor shows you a formula, spends one hour deriving it from basic mathematical concepts and then another hour generalizing the formula so it can also be applied to strange algebraic objects which don't occur naturally outside the heads of mathematicians.
(At PhD level economics in general gets a lot more maths-heavy - both with rgds to applied and pure maths - but most institutions rely on the PhD candidate to learn most of that required knowledge on his own as he/she needs it - even at graduate/M.Sc. level economics is very tame compared to mathematics)