Python Tutorial: Fundamental Financial Concepts

Want to learn more? Take the full course at https://learn.datacamp.com/courses/introduction-to-financial-concepts-in-python at your own pace. More than a video, you'll learn hands-on coding & quickly apply skills to your daily work. --- I'm Dakota Wixom, and I'll be your instructor for this course. I'm currently a quantitative finance analyst at a Silicon Valley AI startup called Yewno, where I build innovative financial products out of our New York City office. In this course, you'll learn about the fundamental concepts necessary in order make data-driven financial decisions. We will cover the time value of money, compound interest, discounting and projecting cash flows, economic decision making, mortgage structures, interest vs equity, the cost of capital, and the basics of wealth accumulation and investment planning. To kick things off, let's start with a simple formula to calculate the return, or gain on an investment. Imagine you made a 10,000 dollar investment on year 1, and on year 2 your investment is worth 11,000 dollars. Your investment return is easy to calculate: simply subtract your initial 10,000 dollars from your final 11,000 dollars to calculate your gain of 1,000 dollars, then divide that gain by your initial investment to derive your investment rate of return of 10% on your initial investment over the year. You can also re-arrange the formula to calculate the dollar value of an investment given a rate of return, r. For example, in this case, if you know the annual rate of return on your investment was 10%, you can multiply the value of your investment, 10,000 dollars, by 1 + 10% to get 11,000 dollars, which matches with the numbers given in the previous example. But what if you have an investment which consistently generates a return year after year, growing larger with each passing period? The value of an investment with constant cumulative growth over time can be calculated based on r, the investment's expected rate of return (or growth