Talk:Fisher equation: Difference between revisions

Example doesn't make any sense

The example doesn't make any sense to me - can somebody fix it? Why is the return at 3.775% HIGHER than at 3.81%? What do you mean by "third term"? Third term of what? Why is the focus on the different paybacks when it should illustrate the fisher equation? —Preceding unsigned comment added by 92.117.27.227 (talk) 07:25, 29 September 2008 (UTC) Third term is actually clear -- it is product of two rates (interest and inflation) -- what is really not clear is how the author arrived at values of 107.84 and 108.50 (how these specific values were calculated?) pounds with bond having higher-yielding rate being valued at lower price.

revision to notation and addition of time dependence

I have made two major changes. First, I have updated the notation to the more traditional r, i, and pi notation which is the same as that used in interest. This is what I see in most modern texts. Second I have added a time dimension to help the intuition on this and to again, bring this aspect of the content up to par with economics texts. The subscripts of the previous notation would also have conflicted -- another motivation for the updated more standard notation. I realize these changes may be controversial, so Ive started this talk section. Please bear with me if I cannot answer immediately, but I will definitely get back here as I can. (Econotechie (talk) 00:27, 5 July 2008 (UTC))

To make it easier for the less economically-inclined, maybe explicitly state that Pi is being used to represent a variable rather than the constant 3.14159... that most people associate with Pi. Upon first read I thought you were assuming the inflation rate to be 3.14% --Stable attractor (talk) 12:25, 27 August 2008 (UTC)

Good point. I looked around a couple books to see what else might be used, but I things like dotted p might be confusing also. If I run across anything else, Ill come back and change it. For now Ive added a note. (Econotechie (talk) 19:53, 19 September 2008 (UTC))

Does $e$ stand for 2.71828... or is that also a variable? The standard notation here is unfortunate IMHO... 76.174.15.250 (talk) —Preceding undated comment added 07:38, 5 December 2010 (UTC).

Cost–benefit analysis conclusion is wrong

These math steps are wrong, it is using the fisher equation two times and concluding that inflation doesn't change the net present value.