2.11 Words and Numbers (An Aside)

In business and perhaps in Finance in particular, memorization is less important than active, creative thinking. Some people find math intimidating, but it does not have to be. By and large, Finance does not require the memorization of formulas. However, one must understand the mathematics.

This is an important distinction. If you regard formulas as memorization, it may become an unpleasant and, worse, a difficult task. Instead, think of formulas as shorthand explanations of the relationships between important financial concepts, between prices and interest rates, for example. If this is done, the relationships will seem clear and logical, and memorization should prove unnecessary, or at least, less so.

Some people consider themselves word- rather than number-persons. Think of numbers as words! Indeed, they are linguistically meaningful. Mathematical symbols are a shorthand way of saying something that can also be said – at greater length – in words.

Over the course of the semester, the student will be exposed to numerous mathematical formulae.