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  • Essay / Analysis of Linear Algebra in the Financial World

    Over time, the value and prices of the product will change depending on the company and temporal financial situation. People will have the opportunity to buy the same products at different prices and in different periods due to the changing situation of the society. To enable people to buy products at a fair price while still making a profit, businesses will need to take into account the impact on product prices that society affects. In Linear Algebra in the Financial World, Barbara Swart (2001) uses the example of determining the price of gold and changing the price over different periods of time to tell the relationship between linear algebra and the financial world. Between 1999 and 2000, there was a Y2K bug with computers and many other electronic devices due to early configuration of the computer program. People define the year with only two digits in the computer program, because when changing the year from 1999 to 2000, the digit will change from "99" to "00", which could cause confusion in data storage and could change from “1999”. » to return to “1900” or “19100” (see [1]). As this could have a big influence on the society, the price of gold could also have a big change. This is why in the article Swart gives the example of changes in the price of gold between 1999 and 2000 due to the Y2K scare and millennium fever. The use of financial concepts and linear algebra tells readers how the price may change in that time period. The difference between increasing or decreasing the price of gold per $1 will result in a huge difference in profit after 2000. So the company must determine a price of gold that is fair to both customers and the customer. business. Swart uses the middle of the paper as an example of the price of gold to determine the relationship between linear algebra and the financial world. The uses of financial concepts and mathematical equations generally support the author's objective that price changes over different periods of time. Like the mathematical research article, it clearly uses symbols and equations to support the author's point of view which shows the result of the completed market item and the changes in price. However, it is not easy for a person lacking mathematical knowledge to understand mathematical concepts and equations. It will be easier for them to read and understand the author's explanation if there are more explanations of the equations or more explanations of wording. Overall, Barbara Swart had clearly explained the relationship between linear algebra and the financial world..