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| Module Delivery |
Spring semester
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| Assessment Requirements |
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Unit(s) of Assessment
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Weighting Towards Module Mark( %)
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2 hour unseen examination
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75%
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Assignment
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15%
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Class test
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10%
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Qualifying Condition(s)
A weighted aggregate mark of 40% is required to pass the module.
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| Module Overview |
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| Prerequisites/Co-requisites |
MS 101 Techniques in Calculus 1
MS 131 Probability and Statistics |
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| Module Aims |
This module introduces the application of mathematics to finance. Compound interest, discounting, cash flows, loans and fixed interest securities are discussed, and a range of mathematical techniques for their analysis is introduced. |
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| Learning Outcomes |
At the end of the module a student should:
- understand compound interest and discounting;
- know how to value and accumulate cash flows;
- know the derivation of formulae for standardised cash flows;
- be able to derive and solve equations of value;
- understand how a loan may be repaid by regular instalments of capital interest;
- understand to measurement of investment performance;
- be able to value fixed interest securities (such as bonds) and determine their yield;
- show an understanding of simple stochastic interest rate models.
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| Module Content |
Interest rates, inflation, discounted cash flows, assessment of investment projects, analysis of loan schedules, fixed interest securities (bonds), investment portfolios and immunisation, stochastic interest rate models. |
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| Methods of Teaching/Learning |
Teaching is by lectures and tutorials. Learning takes place through lectures, tutorials and exercises.
3 lecture/tutorial hours per week for 10 weeks
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| Selected Texts/Journals |
Recommended
J.J. McCutcheon and W.F. Scott, An Introduction to the Mathematics of Finance
D. G. Luenberger, Investment Science |
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| Last Updated |
31 July 2007 |
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