Learnings In Finance

Probability is one the mathematical theories which finds enormous usage in normal world. When you meet your colleague in a mall on a holiday by chance, it could be a rare event of low probability. When we go for a planned medical procedure, we ask the doctor how much risk is involved in it. Depending on the answer, we go for it immediately or postpone a bit . We inherit many traits from our parents. Every human being has 23 pairs(46) of chromosomes. Out of 23 pair of chromosomes of mother, we get 23 (one from every pair);Out of 23 pair of our father we inherit 23.Which one we get from the pair ? Two of them are having equal probability to be inherited.So probability comes into picture when we talk about genetic aspects like your ear appearance  ( genetics ) or hereditary diseases. Quantum mechanics,following uncertainty principle, describes particles position and speed based on probabilistic wave function.This theory, got rejected wrongly by Einstein as he said 'God doesn

Let see compounding interest formulas.  If P is principal r is interest rate per annum (for 10% interest, r = 0.1)   interest for one year = principal *interest rate = P*r . Total amount after one year =Principal + interest =P+Pr. In annually compound interest rate regime P+Pr = P(1+r) become principal at the end of first year.  Then the next year interest would be calculated on this principal P(1+r) r would be interest for the second year. At the end of second year, total amount would be = P(1+r)+P(1+r) * r = P(1+r)^2 After n years total amount = P(1+r)^n For the same interest rate r, after 6 months how much interest would have been accumulated? Half of the annual interest , that is Pr/2    If interest is compounded to principal semi-annually, at the end of first 6 months Total amont= P+Pr/2=P(1+r/2). For the next 6 months interest will be calculated on this. Interest =P(1+r/2)* r/2. Total amount at the end of one year =P(1+r/2) +(P(1+