# Math Calculation and Financial Literacy: The Incidence of Geometric Progressions in the Calculation of Financial Interest

## Abstract

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## 1. Introduction

## 2. Literature Review

**H1.**

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## 3. Materials and Methods

## 4. Results

## 5. Discussion

## 6. Conclusions

## Funding

## Data Availability Statement

## Conflicts of Interest

## References

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Variables | Concepts/Questions | Coding/Source |
---|---|---|

Arithmetic and geometric progressions | Arithmetic succession: Find the two following terms in the 2, 4, 6, 8, … succession | For each question, a dichotomous variable is built: 1 for the correct answer, 0 otherwise, like in Stewart et al. (2007), Bajo et al. (2019) and SEP (2015). |

Geometric succession: Find the two following terms in the: 7, 7/2, 7/4, 7/8, 7/16, … succession | ||

General expression of an arithmetic succession: Express the following succession according to its general term: 2, 8, 14, 20 | ||

General expression of a geometric succession: Express the following succession according to its general term: 1, 1/2, 1/3, 1/4, 1/5 | ||

Geometric series: Depict the following problem with a succession and get the general term: a person decides to save for a year (365 days). For this, he intends to save an additional peso every day. Find the amassed amount. | ||

Simple and compound interest | Simple interest (zero interest): If you lend $25 to a friend and the following week he gives you back the $25, how much interest did he pay you? | Dichotomous variable: 1 for the correct answer, 0 otherwise. Question number 13.1 INEGI (2022). |

Simple interest: You make a $100 deposit to a savings account, which gives you a 2% profit a year. If you do not make further deposits or withdrawals, including interests, at the end of the year you will have… | Dichotomous variable: 1 for the correct answer, 0 otherwise. Question number 13.2 INEGI (2022). | |

Compound interest: You make a $100 deposit to a savings account, which gives you a 2% profit a year. If you do not make further deposits or withdrawals, including interests, at the end of 5 years you will have… | Dichotomous variable: 1 for the correct answer, 0 otherwise. Question number 13.3 INEGI (2022). |

**Table 2.**Population proportion test on geometric progression knowledge and the calculation of financial interest.

Sample n = 142 | Population Proportion Test | ||
---|---|---|---|

Variable | Sample Proportion | Contrast Statistics: Z | p-Value (Right Tail) |

Succession with whole numbers | 0.964 | Z = 11.058 | 0.000 |

Succession with fractional numbers | 0.978 | Z = 11.392 | 0.000 |

General term with whole numbers | 0.598 | Z = 2.33 | 0.009 |

General term with fractional numbers | 0.309 | Z = −4.552 | 0.997 |

Application of succession | 0.753 | Z = 6.029 | 0.000 |

Calculation of simple interest (i = 0) | 0.964 | Z = 11.058 | 0.000 |

Calculation of simple interest | 0.767 | Z = 6.363 | 0.000 |

Calculation of compound interest | 0.457 | Z = −1.024 | 0.152 |

**Table 3.**Test of difference in proportions on knowledge of geometric progressions and the calculation of financial interest by gender.

Men n = 52 | Women n = 90 | Population Proportion Test | |||
---|---|---|---|---|---|

Variable | Sample Proportion | Sample Proportion | Difference in Proportions | Contrast Statistics: Z | p-Value: Two-Tailed Test |

Succession with whole numbers | 0.980 | 0.955 | 0.025 | Z = 0.889 | 0.373 |

Succession with fractional numbers | 0.961 | 0.988 | −0.027 | Z = −0.704 | 0.481 |

General term with whole numbers | 0.557 | 0.622 | −0.065 | Z = −0.818 | 0.413 |

General term with fractional numbers | 0.346 | 0.288 | 0.058 | Z = 0.750 | 0.453 |

Application of succession | 0.769 | 0.744 | 0.025 | Z = 0.264 | 0.791 |

Calculation of simple interest (i = 0) | 0.980 | 0.955 | 0.025 | Z = 0.889 | 0.373 |

Calculation of simple interest | 0.769 | 0.766 | 0.003 | Z = 0.035 | 0.971 |

Calculation of compound interest | 0.519 | 0.422 | 0.097 | Z = 1.037 | 0.299 |

Model 1 Men | Model 2 Men | Marginal Effect Model 2 | Model 3 Women | Model 4 Women | |
---|---|---|---|---|---|

Constant | −0.2977 | −0.2230 | −0.1894 | −0.1177 | |

(0.2734) | (0.2168) | (0.2203) | (0.1570) | ||

Succession, general term with whole numbers | 0.1689 (0.3746) | 0.1348 (0.2902) | |||

Succession, general term with fractional numbers | 0.7600 * (0.4001) | 0.8124 ** (0.3823) | 0.3104 | −0.3229 (0.3138) | −0.2779 (0.2977) |

Observations number | 52 | 52 | 90 | 90 | |

Dependent variable mean | 0.519 | 0.519 | 0.422 | 0.422 | |

McFadden R-squared | 0.067 | 0.064 | 0.008 | 0.007 | |

Number of cases ‘correctly predicted’ | 33 (63.5%) | 33 (63.5%) | 52 (57.8%) | 52 (57.8%) | |

f(beta’x) | 0.398 | 0.398 | 0.391 | 0.391 | |

Likelihood ratio test | 4.873 [0.0874] | 4.670 [0.0307] | =1.095 [0.5784] | =0.878 [0.3486] |

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**MDPI and ACS Style**

Moreno-García, E.
Math Calculation and Financial Literacy: The Incidence of Geometric Progressions in the Calculation of Financial Interest. *J. Risk Financial Manag.* **2024**, *17*, 330.
https://doi.org/10.3390/jrfm17080330

**AMA Style**

Moreno-García E.
Math Calculation and Financial Literacy: The Incidence of Geometric Progressions in the Calculation of Financial Interest. *Journal of Risk and Financial Management*. 2024; 17(8):330.
https://doi.org/10.3390/jrfm17080330

**Chicago/Turabian Style**

Moreno-García, Elena.
2024. "Math Calculation and Financial Literacy: The Incidence of Geometric Progressions in the Calculation of Financial Interest" *Journal of Risk and Financial Management* 17, no. 8: 330.
https://doi.org/10.3390/jrfm17080330