HISTORICAL BACKGROUND THE BIG CHANGE IN INVESTMENT, LOAN, AND MONEY MANAGEMENT

Any person who has been active in finance and investments during the last 45 years is surely aware of the enormous changes that have occurred in the area of personal financial management during that time. A truly immense range of opportunities for both borrowing and investment has opened up for most people in this country. But these opportunities have also presented financial management problems. This book tries to give the reader the mathematical tools to solve these problems.

In the 1950s, investments for most people consisted of deposits in savings accounts and permanent plan life insurance. A few adventurous investors bought common stocks, but not many. Stock trading costs were much higher then than now. Keith Funston, then President of the New York Stock Exchange, actively encouraged individual ownership of stocks, and Merrill Lynch introduced the monthly investment ownership of stocks, and in January 1954, Merrill Lynch introduced the monthly investment plan. The monthly investment plan made it relatively easy for individual investors to buy stocks by making a monthly investment of as little as $40. However, some on Wall Street thought that individuals should not buy stocks at all, but rather content themselves with the modest returns, but complete safety, of savings accounts and permanent plan life insurance.

Borrowing was similarly simple. Prospective home buyers visited their local bank, and, if their application was approved, received their mortgage from the bank. The income of working wives was not...