Basic derivative rules
There are a lot of derivative rules, including multiplication, trigonometry etc.
In finance, we focus mainly on two basic derivative rules:
Rule 1:
If y = ln(x)
Then dy/dx = 1/x
Rule 2:
If y = Axn (where A and n are constant)
Then, dy/dx = nAxn-1
Example 1
If y = 2ln(x)
Then, dy/dx = 2/x (see rule 1)
Example 2:
If y = 3x5
Then, dy/dx = 15x4 (see rule 2)
Example 3:
If y = x3 + 1/sqrt(x)
Note that the above can be specified as y = = x3 + x–0.5
Thus, dy/dx = 3x2 – 0.5x–1.5 (see rule 2)
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