This subject provides a foundation in the mathematics that underpins financial calculations. The theory of financial mathematics is supplemented with applications of that theory to real world problems. These practical applications include valuing a series of cashflows (annuities), valuing bonds with tax implications, calculating loan repayment schedules, valuing forward contracts, modelling investment returns, selecting investment projects and estimating the sensitivity of a series of cashflows to interest rate changes.
|Faculty||Bond Business School|
|Study abroad||Available to Study Abroad students|
1. Describe the time value of money concept and apply it in different situations; understand the difference between real and money interest rates.
2. Define and analyse basic compound interest problems.
3. Calculate present and future values for a wide variety of cash flow streams, using effective and nominal interest rates.
4. Calculate a schedule of loan repayments and identify capital and interest components.
5. Use discounted cash flow techniques to perform project appraisal and capital budgeting.
6. Understand the investment and risk characteristics of a variety of investment assets
7. Demonstrate an understanding of the term structure of interest rates
8. Calculate the delivery price and the arbitrage-free value of a forward contract. Understand and apply probability rules and concepts relating to discrete and continuous random variables
9. Demonstrate an understanding of simple stochastic models for investment returns
STAT11-112 - Quantitative Methods