# Category Archives: study

## Powers of Ten - Units - Dimensions - Measurements - Uncertainties - Dimensional Analysis - Scaling Arguments

2013.05.8 , , Powers of Ten - Units - Dimensions - Measurements - Uncertainties - Dimensional Analysis - Scaling Arguments已关闭评论 , 2,169 views

Now follow me closely.

If the pressure is higher than a certain level the bones will break.

Therefore, for an animal not to break its bones when the mass goes up by a certain factor let's say a factor of four in order for the bones not to break d squared must also go up by a factor of four.

That's a key argument in the scaling here.

You really have to think that through carefully.

Therefore, I would argue that the mass must be proportional to d squared.

This is the breaking argument.

Now compare these two.

## Technology and Invention in Finance

2013.04.21 , , Technology and Invention in Finance已关闭评论 , 1,884 views
##### Overview:

Technology and innovation underlie finance. In order to manage risks successfully, particularly long-term, we must pool large amounts of risk among many, diverse people and overcome barriers such as moral hazard and erroneous framing. Inventions such as insurance contracts and social security, and information technology all the way from such simple things as paper, and the postal service to modern computers have helped to manage risks and to encourage financial systems to address issues pertaining to risk. The tax and welfare system is one of the most important risk management systems.

## The Universal Principle of Risk Management: Pooling and the Hedging of Risks

2013.04.21 , , The Universal Principle of Risk Management: Pooling and the Hedging of Risks已关闭评论 , 1,949 views
##### Overview:

Statistics and mathematics underlie the theories of finance. Probability Theory and various distribution types are important to understanding finance. Risk management, for instance, depends on tools such as variance, standard deviation, correlation, and regression analysis. Financial analysis methods such as present values and valuing streams of payments are fundamental to understanding the time value of money and have been in practice for centuries.

Probability P, 0<P<1
• Multiplication rule for independent events: Prob(A and B) = Prob(A)*Prob(B)
• Probability of n independent accidents = P^n
• Probability of x accidents in n policies (Binomial Distributon):

Expected Value, Mean, Average

Variance and Standard Deviation

• Variance (^2)is a measure of dispersion
• Standard deviation is square root of variance Covariance
• A Measure of how much two variables move together Correlation
• A scaled measure of how much two variables move together

Present Discounted Value (PDV)
• PDV of a dollar in one year = 1/(1+r)
• PDV of a dollar in n years = 1/(1+r)^n
• PDV of a stream of payments x1,..,xn

Consol and Annuity Formulas
• Consol pays constant quantity x forever
• Growing consol pays x(1+g)^(t-1) in t
• Annuity pays x from time 1 to T 