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Module Specifications..

Current Academic Year 2023 - 2024

Please note that this information is subject to change.

Module Title Financial Mathematics
Module Code MS318
School School of Mathematical Sciences
Module Co-ordinatorSemester 1: Mary Hall
Semester 2: Mary Hall
Autumn: Mary Hall
Module TeachersMary Hall
NFQ level 8 Credit Rating 7.5
Pre-requisite None
Co-requisite None
Compatibles None
Incompatibles None
Excel lab exam

MS318 aims to provide students with a grounding in financial mathematics and its related applications, particularly the calculation of present and accumulated values for various streams of cash flows. The module covers simple investment and insurance contracts, interest rate theory including the term structure of interest rates and immunisation theory. The module develops best practice in data analysis and modelling for financial applications and will build on material in module MS119 in the development of financial models and solving equations of value using Excel.

Learning Outcomes

1. Describe the principles underlying financial and actuarial modelling techniques and incorporate best practice in the development of financial models.
2. Build cashflow models for simple investment and insurance contracts and develop and solve equations of value using these cashflow models.
3. Demonstrate an understanding of effective and nominal interest and discount rates and the relationship between them.
4. Describe and solve elementary compound interest problems and problems involving the term structure of interest rates.
5. Demonstrate an understanding of Redington’s theory of immunisation.
6. Apply discounted cashflow techniques for project appraisals.

Workload Full-time hours per semester
Type Hours Description
Lecture26Presentation of course material
Tutorial11Working from supplied tutorial sheets
Laboratory10Practical Excel based labs
Total Workload: 47

All module information is indicative and subject to change. For further information,students are advised to refer to the University's Marks and Standards and Programme Specific Regulations at: http://www.dcu.ie/registry/examinations/index.shtml

Indicative Content and Learning Activities

Actuarial and Financial Modelling
Data sources and exploratory data analysis; model choice; deterministic v stochastic models; assumption setting; sensitivity analysis; scenario-based and proxy models; model review and development; interpreting and communicating results.

Theory of Interest Rates
Interest and discount rates; effective and nominal rates; force of interest; present and accumulated values; compound interest functions; level and increasing annuities and accumulations; term structure of interest rates; immunisation.

Equations of Value for Financial Problems
Loan schedules; Bond prices and yields allowing for income and capital gains tax, optional redemption dates and inflation (real and nominal rates). Solving complex equations of value using Excel.

Project Appraisal
Discounted cashflow techniques; net present value calculations; use of internal rate of return and payback period in project appraisal. Excel models for project evaluation and comparisons.

Assessment Breakdown
Continuous Assessment25% Examination Weight75%
Course Work Breakdown
TypeDescription% of totalAssessment Date
Practical/skills evaluationEnd of semester Excel lab exam.25%Week 12
Reassessment Requirement Type
Resit arrangements are explained by the following categories;
1 = A resit is available for all components of the module
2 = No resit is available for 100% continuous assessment module
3 = No resit is available for the continuous assessment component
This module is category 1
Indicative Reading List

  • JJ McCutcheon and W E Scott: 1999, An Introduction to the Mathematics of Finance, Butterworth-Heinemann, 0 7506 0092
Other Resources

Programme or List of Programmes
ACMBSc in Actuarial Mathematics
AFUAge Friendly University Programme
BSSAStudy Abroad (DCU Business School)
BSSAOStudy Abroad (DCU Business School)
FIMB.Sc. Financial Mathematics
HMSAStudy Abroad (Humanities & Soc Science)
HMSAOStudy Abroad (Humanities & Soc Science)
IESAStudy Abroad (Institute of Education)
IESAOStudy Abroad (Institute of Education)
SHSAStudy Abroad (Science & Health)
SHSAOStudy Abroad (Science & Health)
Date of Last Revision15-FEB-11

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