Exponential

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1. Financial maths - constant.

The exponential constant is a mathematical constant with a value of roughly 2.718282..., usually denoted by the letter e.


2. Financial maths - function.

The related exponential function is ex (e to the power of x). The exponential function in Excel is =EXP( ). The exponential function is the inverse of the natural logarithm.


3. Growth.

Exponential growth means growth other than straight-line.

For example, the series 100, 200, 400... is growing exponentially.


4. Decay.

Exponential decay means the reduction in a variable, for example over time, on a basis other than straight-line.

For example, the reduction in the time value of an option, as its remaining time to maturity expires.


See also