FINANCIAL MATHEMATICS

About this Course

This course will explain, describe and discuss on the basic concepts, calculations and simple applications of the mathematical modelling used in the financial world. Its goal is to provide students with first-hand exposure in financial modelling and actuarial analysis as basic knowledge before proceeding further to the Advanced Financial Mathematics course in the later semesters of the Actuarial Science Program.

Course Learning Outcomes

1) Describe the fundamental concepts, key terms and various investment instruments in Financial Mathematics.
2) Apply the key procedures of Financial Mathematics in valuing various stream cash flows and bonds.
3) Analyse the complexity of financial decisions by translating real-world problems into mathematical terms in business and personal arenas.

Course Syllabus

+ Course Syllabus

1) Interest Rate Measurement
- Interest Accumulation and Effective Rates of Interest.
- Present Value and Equation of Value.
- Nominal Rates of Interest.
- Effective and Nominal Rates of Discount.
- The Force of Interest
- Inflation and the Real rate of Interest.

2) Valuation of Annuities
- Annuity-immediate.
- Annuity-due
- Annuity values on any date.
- Perpetuities.
- Non-standard Terms and Interest Rates.
- Solving for the Number of Payment in an Annuity
- Solving for the Interest Rate in an Annuity.
- Annuity with Non-constant Payments.

3) Loan Repayment
- The Amortization Method of Loan Repayment.
- Amortization of a Loan with Level Payments.
- The Sinking-Fund Method of Loan Repayment.
- Deferring Payment Periods and Interest Conversion Periods.
- Varying Series of Payment.
- Amortization with Continuous Payment.

4) Valuation of Bonds
- Types of Securities.
- Price of Bonds.

Frequently Asked Questions

Q1 : How long should I take to complete the course?
A1 : Advisable to spend 4 hours per week in this course.