How can math help students synthesize real-world stock market data? In these two Desmos activities, students explore different approaches to modeling data with exponential functions.
The first activity: compound annual growth rate
Students will be introduced to the Compound Annual Growth Rate (CAGR) formula in DESMOS: Comparing Funds Using Compound Annual Growth Rate. Using this formula, they can find the annual return that would be needed to grow an investment from its opening balance sheet to its closing balance sheet.
As you can see below, using the CAGR as the growth rate allows students to write a smoothed exponential function to represent the growth of investment over that period. The feature goes through both the initial and final investment value.
The second activity: exponential regression
Regression models are another way to summarize real world data. In DESMOS: Exponential Regression in Investing, students will find the exponential regression model that best fits the given data. In this activity, students are focused on extrapolating a trendline, not matching the initial and final investment values as they did with the CAGR.
This activity includes a fun classroom game where students compete to draw the best model with a summary of Alphabet’s stock prices since 2015. They choose an avatar, submit their model, and then see a leaderboard of the top three models with the highest r- squared values .
Both activities are part of the new unit Financial Algebra: Investing Strategies & Exponential Functions. Discover the course Financial Algebra here!
About the author
Kathryn Dawson
Kathryn (she/her) is delighted to join the NGPF team after 9 years of teaching experience as a mentor, tutor and special education teacher. She is a graduate of Cornell University with a degree in policy analysis and management and a master’s degree in educational science from Brooklyn College. Kathryn looks forward to incorporating her passion for accessibility and educational equity into NGPF’s curriculum design. In her spare time, Kathryn enjoys embarking on cooking projects, walking her partner and dog through the Seattle neighborhood, or lounging in a hammock with a book.
This post Math Monday: Modeling Real Investment Growth with Exponential Functions
was original published at “https://www.ngpf.org/blog/math/math-monday-modeling-real-world-investment-growth-with-exponential-functions/”