TOPIC 5: NATURE OF

FINANCIAL

MANAGEMENT
OBJECTIVES:

SUPPORT THE USE OF

MATHEMATICS IN

VARIOUS ASPECTS AND

ENDEAVORS IN LIFE
SIMPLE INTEREST- IS CALCULATED ON

THE PRINCIPAL, OR ORIGINAL, AMOUNT

OF A LOAN. COMPOUND INTEREST IS

CALCULATED ON THE PRINCIPAL

AMOUNT AND ALSO ON THE

ACCUMULATED INTEREST OF PREVIOUS

PERIODS, AND CAN THUS BE REGARDED

AS "INTEREST ON INTEREST."
A CREDIT CARD AND A CONSUMER LOAN -

ARE TWO DIFFERENT WAYS OF BORROWING

MONEY AND THEY PROVIDE DIFFERENT

BENEFITS. A CONSUMER LOAN PROVIDES A

SET PLAN FOR YOUR MONTHLY DOWN

PAYMENTS WHICH GIVES MANY A SENSE

OF SECURITY. YOU CAN ARRIVE BACK

FROM A VACATION PAID WITH A CONSUMER

LOANS AND NOT EXPECT ANY SURPRISES.

MUTUAL FUNDS AND EXCHANGE-TRADED

FUNDS ARE NOT INVESTMENTS, IN THE

SENSE THAT A STOCK OR A BOND IS.

STOCKS AND BONDS ARE ASSET CLASSES.

MUTUAL FUNDS AND ETFS ARE POOLED

INVESTMENT VEHICLES, WHERE THE

MONEY OF A NUMBER OF INVESTORS IS

TAKEN TOGETHER TO BUY LARGE BLOCKS

OR LARGE COLLECTIONS OF SECURITIES

HOME OWNERSHIP

- THE SITUATION OF OWNING ONE'S

HOUSE OR FLAT, OR OF HAVING A

MORTGAGE ON IT. HOME OWNERSHIP

IS ON THE INCREASE.
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 TOPIC 6:

MATHEMATICAL

SYSTEM
OBJECTIVE:

USE MATHEMATICAL

CONCEPTS AND TOOLS IN

OTHER AREAS SUCH AS IN

FINANCE,VOTING, LOGIC,

BUSINESS, NETWORKS AND

SYSTEM
A SYSTEM OF LINEAR INEQUALITIES

IN TWO VARIABLES CONSISTS OF

AT LEAST TWO LINEAR

INEQUALITIES IN THE SAME

VARIABLES. THE SOLUTION OF A

LINEAR INEQUALITY IS THE

ORDERED PAIR THAT IS A

SOLUTION TO ALL INEQUALITIES IN

THE SYSTEM AND THE GRAPH OF

THE LINEAR INEQUALITY IS THE

GRAPH OF ALL SOLUTIONS OF THE

SYSTEM.
LINEAR PROGRAMMING IS USED FOR

OBTAINING THE MOST OPTIMAL SOLUTION

FOR A PROBLEM WITH GIVEN CONSTRAINTS.

IN LINEAR PROGRAMMING, WE FORMULATE

OUR REAL-LIFE PROBLEM INTO A

MATHEMATICAL MODEL. IT INVOLVES AN

OBJECTIVE FUNCTION, LINEAR

INEQUALITIES WITH SUBJECT TO

CONSTRAINTS.
SIMPLEX METHOD, STANDARD TECHNIQUE

IN LINEAR PROGRAMMING FOR SOLVING

AN OPTIMIZATION PROBLEM, TYPICALLY

ONE INVOLVING A FUNCTION AND

SEVERAL CONSTRAINTS EXPRESSED AS

INEQUALITIES.THE SIMPLEX METHOD IS A

SYSTEMATIC PROCEDURE FOR TESTING

THE VERTICES AS POSSIBLE SOLUTIONS.

STANDARD SIMPLEX METHOD EXAMPLE:
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