Geometric sequence

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Revision as of 18:41, 17 January 2010 by imported>Peter Schmitt (add application in finance)
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A geometric sequence is a (finite or infinite) sequence of (real or complex) numbers such that the quotient of consecutive elements is the same for every pair.

In finance, compound interest generates a geometric sequence.

Examples

Examples for geometric sequences are

  • (finite, length 6: 6 elements, quotient 2)
  • (finite, length 4: 4 elements, quotient −2)
  • (infinite, quotient )

Application in finance

Mathematical notation

A finite sequence

or an infinite sequence

is called geometric sequence if

for all indices i. (The indices need not start at 0 or 1.)

General form

Thus, the elements of a geometric sequence can be written as

Sum

The sum (of the elements) of a finite geometric sequence is

The sum of an infinite geometric sequence is a geometric series: