Finance Application

 

   I am a doctor which means I am not good at Math! 

This week was challenging for me. I have practiced more financial concepts such practical use of balance sheet and investment decisions . I have created the equations on a spreadsheet. However, understanding the baseline equation and concepts was essential. 

This was the first time I understood the Bonds. I have a fair knowledge of shares and the stock market previously but not of the Bonds. This week allowed me to understand Bonds that might help me even in my personal investment decisions. 

I read ​the Wall Street Journal article (Goldfarb, 2024) entitled "After Another Bad Year for Bonds, Investors Lose Faith in a Turnaround" which discusses the growing concerns among investors regarding the bond market. Despite entering the past two years with optimism, investors have faced consecutive disappointments. The article highlights concerns that the challenging environment for bonds may persist or even worsen, as hopes for a market turnaround diminish. I realize that Bonds market is as big as the stock market!

Another new concept I learned is the Net Present Value (NPV) which is a financial metric used to evaluate the profitability of an investment or project. It represents the difference between the present value of cash inflows and the present value of cash outflows over a given period, discounted at a specific rate (usually the required rate of return or cost of capital). It is important because it accounts for the time value of money, recognizing that a dollar today is worth more than a dollar in the future. In addition, it helps compare different investment opportunities and choose the most profitable one.

The quiz this week, with plenty of practical exercises was a mental exercise! It tested my knowledge and helped me apply what I learned. While some concepts were difficult at first, working through them strengthened my understanding. It was a tough one, but I feel that I have made significant progress in financial calculations.

I read different articles and watched YouTube videos to understand the concepts and to remind myself of some equations solutions tricks. I still find some areas challenging but overall, I’m gaining confidence.


References:

​Toppr.com. (n.d.). Present and net present value. https://www.toppr.com/guides/business-mathematics-and-statistics/time-value-of-money/present-and-net-present-value/

Sam, Goldfarb. (2024, February 22). The Wall Street Journal. After another bad year for bonds, investors lose faith in a turnaround.  https://www.wsj.com/finance/investing/after-another-bad-year-for-bonds-investors-lose-faith-in-a-turnaround-ea60f320

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