Wall Street Math

Paper Summary:

This user-friendly paper shows how mathematics can be used to understand the forces that move the stock exchange markets. A general overview of investment, financial assets and their trading market is offered in order to understand their role in developed economies. The paper then looks at specific mathematical concepts and how they can be related, including random variables, standard deviation and covariance.

From the Paper:

"Financial assets and the markets in which they are traded, play several crucial roles in developed economies. They allow individuals to store their present wealth in investments that will benefit themselves and the overall economy, helps companies spread the risk of operations by involving more participants willing to accept that risk for a rate of return and provides the ability for investors to "pool" their resources with other investors, creating a greater potential for benefit than any could have achieved with their own resources alone. If individuals choose to invest, they may place their wealth in financial assets with the expectations that the company will use that money to increase the value of the company and the level of income generated, making the company and consequently, the investment, worth more."

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