What's the hardest (longest-running) financial calculation?

[Valentin Albillo]

.
Hi, EdS2:

(10-02-2020 08:28 AM)EdS2 Wrote:  I was idly wondering: which of the many functions and features of a financial calculator will take the longest time to run?

In terms of built-in functionality, the calculation of the IRR (Internal Rate of Return) is by far the most complex one (with computation of a long Mortgage Amortization table being a distant second), as it involves solving an Nth-degree polynomial equation, which can only be done iteratively and is fraught with problems (multiple solutions, no solution, inaccurate solutions), thus it takes a potentially long time to compute in classic calculators. HP had to develop new algorithms to implement it in the HP-92 Business/Financial, thus solving the aforementioned problems.




In terms of algorithmic complexity there are many extremely complex financial calculations, which require programming. One such (among many) is the Black-Scholes computations, just have a look at this whole page to get the idea:

Black-Scholes model

but even that is just one among many others, anything having to do with Derivatives pricing is usually extremely complex. Have a look at Mathematical Finance for many links and details.

Regards and have a nice weekend (and take care !).
V.