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# L18_blanks - Day 22 Lecture 18 Linear Models 2 2 Real World Models By letting math variables[symbols correspond to real world variables[stuff we

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1 Day 22 Lecture 18 Linear Models Real World Models By letting math variables [symbols] correspond to real world variables [stuff we don’t know], a real world problem can be ____________ by something as simple as a function, such a model is called a ________ __________ model. Many real world problems are analyzed via models that include a combination of many different mathematical structures, not just functions. A Linear Model is a _____________ function which is used to model a real world problem , they are used in actual research in the fields of Business, Medicine, Exercise Physiology, Psychology, Statistics, and Advanced Mathematics. 2 2

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2 How Banks Make Money 1) Banks make money by charging fees to ___________ money and fees to ___________ money. 2) Banks can ____________ the money they’re holding to make more money for themselves. To do this, the bank account needs to stay _____________. So ____________ accounts are bad for banks, since money is always going in and always going out. 3 0 How Banks Make Money, part 2 _____________ accounts are supposedly stable since 1) People want to use them to __________ money. [Supposedly…] 2) Money goes in _____________. 3) Money __________ ever goes out. To motivate people to use them, Banks pay ____________ as a percentange of the money kept in the account. Since these accounts aren’t really all that stable, banks pay premium [the best yo!] ___________ on Bonds . 4 0
How Banks Make Money, part 3 When a Bond is purchased its values increases over a time by an amount _______________ to its initial investment amount, called the _____________. Interest that collects only on the _______________ is called ___________. Bonds are __________ and can’t be spent or cashed until they ___________. Some definitions of a Bond say a Bond’s value doesn’t change until it matures , but that’s _________ since some investors are willing to buy bonds before they mature . The value of a Bond over time is a ______________ Model. 5 4 Linear Model – Simple Interest Give me an amount to invest in an account [I take Credit Cards]: Suppose a Bank offers a bond which matures in five years and pays 3 % simple annual interest . The words

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## This note was uploaded on 07/23/2011 for the course MGF 1107 taught by Professor Staff during the Fall '08 term at University of Florida.

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L18_blanks - Day 22 Lecture 18 Linear Models 2 2 Real World Models By letting math variables[symbols correspond to real world variables[stuff we

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