This subject offers a foundation in compound interest theory which underpins numerous financial calculations. This theoretical knowledge is supplemented with applications to real world problems such as valuation of various types of annuities, bonds, forward contracts, selecting investment projects, hedging and calculating rate of return of a particular investment. An introduction to simple stochastic models is also provided.
|Faculty||Bond Business School|
|Study abroad||Available to Study Abroad students|
1. Describe the concept of time value of money and apply it in different situations; understand the difference between nominal rate and effective rate of interest, real and money interest rates, rate of interest and rate of discount.
2. Calculate present and future values for a wide variety of cash flow streams (eg. Immediate annuity, annuity-due, deferred annuity, increasing/decreasing annuity), using effective or nominal interest rate, or rate of discount.
3. Calculate a schedule of loan repayments (loan term, repayment amount, rate of interest charged) and identify capital and interest components of each loan repayment.
4. Use discounted cash flow techniques to perform project appraisal and capital budgeting.
5. Explain the investment and risk characteristics of a variety of investment assets.
6. Demonstrate an understanding of the term structure of interest rates, the concept of spot rate, forward rate, and duration of a series of cash flows.
7. Demonstrate an understanding of simple stochastic models for investment returns.
STAT11-112 - Quantitative Methods