User:CaitlinLastiwkaFarquharson

Hi, I am Caitlin

Applications of Calculus in the Stock Market

My field of study at university is commerce. The traditional idea, is that those who enter commerce are good with numbers and lack creativity. With the new generation and the rapid rate of increase of new technologies, mathematical skills and left brain thinking are becoming less and less valued and the ability to think critically and with innovation are more and more crucial. I would be lying if I said that these new valued skills in business aren’t what drew me into the field, however I acknowledge the importance of calculus and its relevance in my faculty.

Math 110 has taught me the practical applications of calculus and how prevalent it truly is in our day to lives. The area in which I find it most useful and find that I use most in economics, specifically studying market share. Studying the stock market, there are many applications of calculus, below are few of those examples.

When studying market share, rate of change of the markets is the most important area of study. Recently in class that is what we have been learning. We are able to predict the rate of change in the stock market by using the equation: rate of change= close today-close(x) days ago/ close (x) days ago. If we apply this to an example we can discover the rate of change for a specific stock. Today Yamana Gold Inc had a closing price of $11.5, on December 31st the closing price was $12.77. In order to establish the rate of change we can plug these values into the above equation. 11.5-12.77/12.77 which is equal to -0.099 percent change between today and twenty seven days ago. In addition to using rate of change we can also use this equation to look at the momentum of a stock. In this case the stock is negative which means that a downtrend is sustained, if the number was positive the uptrend would be sustained. When the stock begins to reach above zero it alerts stock brokers that it is an opportune time to buy stock, likewise if the trend comes close to zero the shareholder should think about selling. Although in the stock market, there is no instantaneous rate of change, which is something I found interesting when doing research. However, it is easy to point out that while prices are trending upwards, the rate-of-change is in the positive region relative to scale. Likewise, when the prices are trending downwards rate-of-change is in the negative region. When thinking about this, I realized that it was very similar to derivatives of quadratic equations. This is a useful tool to access and predict whether you should acquire stocks in a company. By using this equation in the business world we are able to become informed stock brokers and have information to provide our clients with.

Pythagorean Theorem

This is the topic that we all learnt in high school math. For me it is a comfort topic. a^2 + b^2 = c^2, something that makes me feel comfortable in the class room, a feeling that rarely occurs for me in math. Everything we know about the Pythagorean theorem comes from Pythagorean triples- the relationships between the sides of a right triangle. We find the longest side of the triangle called the hypotenuse by adding the squares of the two shorter sides of the triangle. Pythagorean theorem is used in many different elements of mathematics, the most frequent being trigonometry. Something about Pythagorean theorem that is unique to many other theorems in math is that we use it all the way from math in grade 6, to math in our PHD Thesis. It is such a part of our daily lives that it makes frequent appearances in pop culture. For example, it is in a song in Pirates of Penzance, an episode of the Simpsons and the movie the Wizard of Oz. Basically the Pythagorean theorem is my favorite part of math. YAY Pythagorean Theorem!