Posted on 12/06/2011 12:08:26 PM PST by SeekAndFind
You're on the trading floor, trying to price out if a 15-year bond issued by General Electric will generate the returns needed to placate your investors.
Bad news, your calculator is dead and the trader from Cantor Fitzgerald is readying to signal his buy. What to do?
Well, if all you need to do is double the investment in five-years, you're in luck.
That's probably not the case, and GE probably isn't issuing 15-year debt. But we compiled a list of six math tricks that might just come in handy.
If you have a math trick you'd like us to add, leave it in the comments or tweet it to @EricGPlatt.
1) The Rule of 72
Need an easy way to determine how long it will take to double your returns? Simply divide the number 72 by your projected growth rate.
So, if your returns are increasing by 10% per year, it will take 7.2 years for them to double in size.
2) The Rule of 115
If you're more inclined to triple your returns, because you're not as risk averse (or perhaps your time horizon is just a tad bit farther out), simply take the number 115 and divide it by your growth rate. This will give you the amount of time it will take to triple your returns.
So, if your returns are increasing by 10% per year, it will take 11.5 years for them to triple in size.
3) The Rule of 70
The rule of 70 dictates how long it will take for inflation to halve the value of a dollar. Simply divide 70 by your expected rate of inflation.
For example, if you expect 3% inflation, then divide 70 by 3.
(Excerpt) Read more at businessinsider.com ...
1 1 1 2 11 121 3 111 12321 4 1111 1234321 5 11111 123454321 6 111111 12345654321 7 1111111 1234567654321 8 11111111 123456787654321 9 111111111 12345678987654321The simple rule: How many times to hit the 1 key before hitting the x2 key.
Or on most calculators: How many times to hit the 1 key before hitting the times key then the equals key.
When calculators first came out this was a quality test. Still is.
ping for later
1 1 1 2 11 121 3 111 12321 4 1111 1234321 5 11111 123454321 6 111111 12345654321 7 1111111 1234567654321 8 11111111 123456787654321 9 111111111 12345678987654321
When the perceived joy in gaining money is far exceeded by the perceived sorrow in losing it!
Now that is handy.
It’s handy but darned hard to explain in print
Keeping track of leap years will be the hardest part.
The 1-2-3 hint took me a couple minutes to decipher. But the rest came easily.
Ping
How offen? Your math skills are great, but your typing skills are weak! ; )
How offen? Your math skills are great, but your typing skills are weak! ; )
save
Oh, I know, I know! When the yield curve crushes the bond market the investors will be mad no matter what the coupon is!!! ; )
more tricks for the kids (Homeschooling is awesome)
You can say that again ;) Actually, I was spelling phonetically as I typed. I noticed it, at least after I typed it.
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