zealand is comfortably servicing its external debt, supported by a healthy economic growth rate and a robust capacity to earn foreign exchange. hedges are in place to reduce the impact of exchange rate movements on new zealand's external obligations. but this healthy situation notwithstanding, we would of course be remiss if we did not continue to watch developments closely for signs of financial vulnerability. lastly, we are interested in investment and borrowing behaviour because it affects economic growth. new zealand's growth in the past has probably been lower than it could have been, partly reflecting poor savings and investment. the high and variable inflation environment prevailing in the 1970s and 1980s was no doubt one of the main factors hindering effective saving and investment, by making it difficult for investors to discern well - performing from poorly - performing investments. low and stable inflation now obviously helps, but the fact remains that the quality of our investment decisions is crucial for our future economic growth. wise investment increases productivity and the economy's real rate of return, producing better growth and higher standards of living. and wise investment, in turn, means individual investors exercising good judgement and effective scrutiny when making their personal investment decisions. so, with an eye on sparing households unnecessary grief, mitigating risk to the financial system, and maximising economic potential, how should we invest in a world of low inflation? let us start with the simple idea that the objective of investment is to maximise the expected rate of return for a given level of risk, over a particular period of time. risk is the potential variability of the investment's return, including, in the extreme, the possibility that the investment might lose some or all of its value. for example, the investment might go bust, it might be difficult to realise the value of the investment when needed or required, and economic factors such as exchange rate or interest rate movements might cause the value of the investment to fluctuate. it is a fact of life that investments with higher promised rates of return generally carry higher levels of risk. this rule applies right across the spectrum of different investments - from low - risk propositions such as bank deposits and government bonds, through to higher - risk ones such as corporate bonds, subordinated notes, real estate and equities. the second important idea is that, when looking at the return on an investment, one should distinguish between the nominal return and the real return. the nominal return is the return received in cash flow and in capital gain before taking into account general

demonstration of how a humble, untutored village boy, with sheer passion, inspiration and inherent talent, rose to become one of the world ’ s greatest mathematicians. from this perspective, this conference is perfectly positioned to create awareness amongst the undergraduates about the collaborative nature of mathematics, technology, commerce, science and social sciences and the vast opportunities that mathematics can offer. in this background, i plan to talk briefly about the attractions of mathematics, the need for studying mathematics, its applications, the challenges in mastering the subject, prospects it holds for those who pursue the discipline and about the risk of misusing mathematics. mathematics, the prince charming 3. what is mathematics? a. the word itself comes from greek “ mathema ” meaning knowledge, study, learning. b. there seems to be no consensus among professionals on the issue of defining what mathematics is. in fact, you will be surprised that there is even no consensus on whether it is an art or a science. c. definition - wise, there are three sets of definition that i am aware of : bis central bankers ’ speeches i. logicist : benjamin pierce ’ s “ the science that draws necessary conclusions ”, or russell ’ s “ all mathematics is symbolic logic ”. ii. intuitionist : from the philosophy of brouwer “ mathematics is the mental activity which consists in carrying out constructs one after the other ”. iii. formalist : identifying mathematics with all its symbols and the rules for operating on them 4. mathematics is, perhaps, the oldest of sciences that has existed, developed and matured in either explicit or in latent form over thousands of years. the concept of numbers was not only known to prehistoric man but may also be known to animals. for example, when lions hear a neighboring pride roaring, they calculate how many lions are roaring compared to the number of lions in their own pride. if there are more lions in their own pride, or the numbers are equal, or the other pride outnumbers them by up to three to one, they will always roar back. if the other pride outnumbers them by more than three to one, they stay quiet. most animals would know the difference between a bowl containing 4 apples and one with 8 apples or even the fact that there is something common between 4 apples and 4 oranges. 5. the beauty and charm of mathematics has lured, intrigued and inspired countless geniuses across the globe to spend sleepless nights in the hope of unraveling its