Draft1


 * 0pts. This was too late Carola...I'll check on draft 2 that was for last Friday...**

__**Financial Mathematics.**__

Financial Mathematics is a derivation of applied mathematics that studies the value of money over time, combining the capital, the rate and time for a return or interest, through assessment methods that allow taking investment decisions. Also is known as investment analysis, investment management or financial engineering. Financial Mathematics has proved to be a fundamental discipline in the world of business and banking.

Financial mathematics are very practical application, their study is closely linked to the resolution of problems and exercises very similar to those of everyday life in the business world.

__Basics concepts to know a few of financial mathematics.__

Employers who borrow money must pay interest __(I)__ to the owner or financial institution for using their money.

The amount borrowed is the capital or principal __(VA or P)__, the sum of both (capital plus interest) is called the amount __(VF),__the agreed period for the repayment of the loan is the term __(n).__ The interest charged is proportional to both the capital and to the period of loan, it is expressed through an interest rate __(i).__ For the economic theory, interest is the price of money. 

When only the interest on the principal, i.e. on the totality of the money borrowed is called simple interest.

__Simple interest formula:__

Interest is the product of three factors, capital (VA), time (n) and rate (i), so we have:

**__I = VA * n * i__**

This is the formula or equation to calculate simple interest.

__Example of application:__

1. Calculating simple interest.

A company pays 6% on times deposits. Determine the annual payment for interest on a deposit of CU 18,000. (CU = currency units).

__Answer:__ VA = 18,000. n = 1. i = 0,06. I =? I = 18,000 * 1 * 0,06 = 1,080.

The company pays annually on this deposit the sum of 1,080 CU.

2. Calculating the period of an investment.

A financial institution 250,000 CU to the 17.6% invested in local mortgages and won 22,000 CU. Determine how long the money was invested.

__Answer:__

 VA = 250,000; I = 22,000; i=0,176; n =? I = VA * n * i; n = I / (VA * i) n = 22,000 / (250,000 * 0,176) = 22,000 / 44,000 = ½

The money was invested for half year.

I conclude that the financial mathematic is very important to estimate several economic aspects of daily life and business world because with them we can obtain greater benefits by making a preliminary analysis of our investments.

__Corrections by myself:__ I think that it is okay but I think that is better to add a little more information.