Embedded finance and Rounding: Difference between pages
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Rounding is a reduction in the accuracy to which numbers are displayed, in order to make them easier to understand. | |||
Excel has an Advanced option whether to calculate to full accuracy, or only to the displayed accuracy. | |||
== Round don't truncate == | |||
It's better practice to figures for presentation, rather than truncating them. | |||
For example: | |||
1.0049988 is expressed to 7 decimal places. | |||
: | |||
Rounding 1.0049988 off to fewer than 7 decimal places, it becomes: | |||
*1.004999 to 6 decimal places (NOT 1.004998) | |||
*1.00500 to 5 decimal places (not 1.00499) | |||
*1.0050 to 4 decimal places (not 1.0049) | |||
*1.005 to 3 decimal places (not 1.004) | |||
If you truncate a final result instead of rounding it, it is not a strictly correct presentation. | |||
It's also important not to truncate the results of intermediate workings. | |||
Doing that introduces errors into your final results. | |||
== | == Rounding errors == | ||
Even rounding correctly in intermediate workings introduces errors in final results. | |||
The only way to avoid rounding errors is to keep full accuracy in the intermediate workings. | |||
== See also == | |||
* [[Excel]] | |||
* [[CertFMM]] | |||
[[ | |||
[[ | |||
Revision as of 16:52, 3 April 2015
Rounding is a reduction in the accuracy to which numbers are displayed, in order to make them easier to understand.
Excel has an Advanced option whether to calculate to full accuracy, or only to the displayed accuracy.
Round don't truncate
It's better practice to figures for presentation, rather than truncating them.
For example: 1.0049988 is expressed to 7 decimal places.
Rounding 1.0049988 off to fewer than 7 decimal places, it becomes:
- 1.004999 to 6 decimal places (NOT 1.004998)
- 1.00500 to 5 decimal places (not 1.00499)
- 1.0050 to 4 decimal places (not 1.0049)
- 1.005 to 3 decimal places (not 1.004)
If you truncate a final result instead of rounding it, it is not a strictly correct presentation.
It's also important not to truncate the results of intermediate workings.
Doing that introduces errors into your final results.
Rounding errors
Even rounding correctly in intermediate workings introduces errors in final results.
The only way to avoid rounding errors is to keep full accuracy in the intermediate workings.
