Discovering Math Behind Investing and Stocks

Content:

1. How this project will help me?

2. Tasks
2.1 Finding how much of a company you own based on how many shares bought.
2.2 Math behind how fractional shares work
2.3 Income plan regarding stable growth with reinvested dividends. (annual

analysis and assuming that the company won’t stop paying dividends)

2.4 Identifying a portion of a recorded statistical growth graph of a stock and

examining how math is used.

2.5 Calculation process of a share regarding a specific company.

2.6 Risk and reward ratio estimates depending on where you invest, annual

analysis. (bond, bank, stock market, real estate, other people etc.)

3. Conclusion regarding what I have learned/ developed.

Math Topics: Probability, Functions, percentages, graphing and analyzing graphs

1. How this project will help me?

Math is essential in our daily life, many topics such as investing and the stock
market burry math in their structure, so how can math be used to have a better
understanding of investing and the stock market?

Investigating and resolving this question will improve how I perceive

investing and use math to:

• foresee increase/decrease in the stock market.

• Calculate my possible profit/loss.

• Invest in a more concerned way.

To sum up, foreshadowing and predict my balance will be inevitable.

 2.1

Finding how much of a company you own based on how many shares
bought.

Share is a fraction of a company which an individual can own.

2.3 Income plan regarding stable growth with reinvested dividends.
(Annual analysis and assuming that the company won’t stop paying
dividends.)
Supposed Balance: $100
Chosen companies and funds to invest in and money spread:
Microsoft: $20
Apple: $25
Amazon: $20
A&P500: $35

Pie graph Protion

Microsoft Apple Amazon S&P500

Example scenario fort the next year (increase of decrease in share

values):
Amazon: Down by 0.87%
Apple: Up by 3.9%
Microsoft: Up by 8.7% These values mean the
S&P500: Up by 3.2% increase or decrease in
the initial invested money
in the portfolio.
 2.4 Identifying a portion of a recorded statistical growth graph of a

stock and examining how math is used.

1 Month of recorded S&P500 Graph

 Black line indicates the SMA short for Simple Moving Average

SMA indicates a function f(x)= (Sum (Price, n)) / n n=time period

SMA is calculated by

First: Identifying how many market periods to calculate.

Second: Determining time period for the SMA

Third: Multiply market periods by time of SMA and get a result of X which indicates time period
that market closing values will be gathered.

Last: Sum up the closing values and divide it by time periods on SMA chart.

Example: 5periods x 1day = 5days

Last 5day closing price examples: 2,842/ 2,851/ 2,843/2,860/2,848

2,842+2,851+2,843+2,860+2,848=14,244

14,244/5=2.848,8
High vs Low Peaks Graph (Same time line)

f(x)=High peek
Low Peek
Every point on the Graph is structured with this function using the previous graph statistics.
Every point where the value is high is taken and divided by lowest in the same time line.

Example: High 2.865 2.865 = 1,1863354

Low 2.415 2.415