Constant

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1. Financial maths - statistics - universal constants.

A universal constant is a value observed in nature, that forms part of a mathematical or statistical relationship.

Examples include the exponential constant - e - approximately 2.718282.


2. Financial maths - analysis - modelling - inputs.

More broadly, any amount that is assumed to be unchanged, for the purpose of producing a simplified model.

For example, the dividend valuation model assumes a constant rate of dividend growth - "g" - from Time 1 onward.

Contrasted with a variable.


Making this assumption in error is a common source of analysis and modelling errors.

This assumption is sometimes known as the ceteris paribus assumption.


3. Measurement - money market funds.

Any basis of measurement in which an amount is targeted - or held - at a fixed level.

For example, the constant currency exchange rate basis of comparing financial results in successive periods.

Another example is the constant net asset value basis of maintaining a money market fund.


4. Continuity - near-continuity.

Examples include constant trading, and constant dialogue between interested parties.


See also