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Module Availability |
Spring |
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Assessment Pattern |
Unit(s) of Assessment
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Weighting Towards Module Mark( %)
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Coursework
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25 %
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Exam (2 hours unseen)
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75%
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Module Overview |
This module introduces students to the theory of finance, including mortgage payments, assessment of simple cash flow models and simple financial derivatives.
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Prerequisites/Co-requisites |
CALCULUS MAT1015 (MS114)
PROOF, PROBABILITY AND EXPERIMENT MAT1017 (MS125)
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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 |
By the end of this module, students 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 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 |
The contents of this module will include:
- 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, tutorials and example classes. Learning takes place through lectures, exercises (example sheets), preparation for tests and background reading.
There will be 3 contact hours for 10 weeks consisting of lectures, tutorials and example classes . |
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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 |
29.10.08 |
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