It’s not necessarily. A peculiarity of finance as a field of study is that a lot of the people studying finance only care about direct applications and a lot o

It’s not necessarily. A peculiarity of finance as a field of study is that a lot of the people studying finance only care about direct applications and a lot of the people teaching finance had this mindset when they learnt. It’s easy to end up with some poorly taught material. If you carefully looked at the model which gave rise to the equation you are considering, there probably is a very tangible meaning to the figure everyone is ball parking.