From: "Paul S. Penrod" <furballs@netcom.com>
Date: Thu, 23 May 1996 15:02:09 +0800
To: cypherpunks@toad.com
Subject: Re: Floating Point and Financial Software
In-Reply-To: <199605221618.JAA04180@netcom7.netcom.com>
Message-ID: <Pine.3.89.9605221209.A6231-0100000@netcom4>
MIME-Version: 1.0
Content-Type: text/plain



While I wont argue the veracity of floating point use in financials, I 
will make a point or two for your consideration.

The basic issue in the micro world has been imprecision - primarily due 
to word size (8 and 16 bit). Frankly I view it more as a pain tolerance 
to estimation. 

Now that 32 and 64 processors are handy (yes the 80 bit x87 has been 
around for a while), it becomes more of an issue of hair splitting. 

I never incorporate floating point into any of the financial software I 
have written over the years, primarily just on a matter of principle. 
Secondly, since most of it was written to the Intel platform (read 
washing machine controller), there is a very distinct advantage in doing 
integer only from purely a performance basis.

As to acuracy. Normally it doesn't matter when the rounding error sits 
some 18 to 23 decimal places out, when you are calculating dollars and 
cents, but many of the calculations I have been forced to endure center 
around such mathematical abuses as compound interest. Here, it is not 
only probably, but expected to work thousands of recalculations in a 
series, with each building upon the last. Rounding error grows very 
quickly in these types of circumstances. However, just to be fair, there 
is a plethora of business math done in software that limits itself from 
one to several recalcs, and the accuracy only needs to be to the penny or 
at worst 4 to 6 decimal places out.

Even Intel can handle this.... :-)

>From alt.humor.pentium:

DId you hear that Intel has found a home for all those pentiums with the 
floating point error ? They sold them to Mattel.

Now when you pull Barbie's string, she says "Math is hard..."

...Paul (politically incorrect and loving it..)

On Wed, 22 May 1996, Mike Duvos wrote:

> There seem to be a few mini-flames on the list over whether
> floating point data representations are appropriate for financial
> software.
> 
> In a nutshell, the answer is "YES", and the use of floating point
> arithmetic is common in such applications.
> 
> One argument heard against the use of floating point is that it
> is inherently "imprecise." In reality, floating point
> representations and the results of floating point operations are
> perfectly well defined, and the points on the real number line
> which are exactly representable by double-precision floating
> point values are usually a superset of those representable by the
> default integer on most machines.
> 
> Storing monetary values as double-precision floats having integer
> values in cents is even common in COBOL programs, where the
> "COMP-3" data type allows the use of fast floating point in lieu
> of the default and slow manipulation of packed decimal and
> decimal data.
> 
> It is even common in certain CPUs, like CDC Mainframes and
> SPARCS, which are primarily floating point engines, to omit
> integer divide and sometimes even multiply, and to provide a
> subroutine which employs floating point calculations to emulate
> these operations. This is completely transparent to the user of
> the machine, and there is no problem in using floating point to
> do integer operations.
> 
> In fact, when running financial applications on large engineering
> mainframes, which generally lack a business instruction set,
> floating point is not only commonly employed, it is the obvious
> way to get the maximum performance out of the machine.
> 
> --
>      Mike Duvos         $    PGP 2.6 Public Key available     $
>      mpd@netcom.com     $    via Finger.                      $
> 
> 

-------------------------------------------------------------------------

"Faced with the choice between changing one's mind and proving that there
 is no need to do so, almost everybody gets busy on the proof"

                                            -- John Kenneth Galbraith

"Success is attending a funeral as a spectator"

                                            -- E. BonAnno 

-------------------------------------------------------------------------