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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.
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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.
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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
.
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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.
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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.
 Fall '08
 Staff

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