Module: Mathematics of Finance: An Introduction

Latest Module Specifications

Current Academic Year 2025 - 2026

Module Title	Mathematics of Finance: An Introduction
Module Code	MTH1038 (ITS: MS216)
Faculty	Mathematical Sciences	School	Science & Health
NFQ level	8	Credit Rating	5

Description

MS216 aims to provide students with a grounding in elements of financial mathematics and its related applications, particularly the calculation of present and accumulated values for various streams of cash flows. Applications will include the use of a variety of annuity functions in loan calculations and investment project appraisal problems.

Learning Outcomes

1. Show how interest rates or discount rates may be expressed in terms of different time periods.
2. Calculate the present value and the accumulated value of a stream of equal or unequal payments using specified rates of interest, and the net present value at a real rate of interest, assuming a constant rate of inflation.
3. Define and use the more important compound interest functions including annuities certain.
4. Define an equation of value.
5. Describe how a loan may be repaid by regular instalments of interest and capital.
6. Apply discounted cashflow techniques to solve investment project appraisal problems.

*Type*	*Hours*	*Description*
Workload	Full time hours per semester
Lecture	24	Lecture material on course content.
Tutorial	11	Tackle 4 tutorial sheets over the Semester.
Total Workload: 35

Section Breakdown
CRN	20787	Part of Term	Semester 2
Coursework	0%	Examination Weight	0%
Grade Scale	40PASS	Pass Both Elements	Y
Resit Category	RC3	Best Mark	N
Module Co-ordinator	Mary Hall	Module Teacher

Type	Description	% of total	Assessment Date
Assessment Breakdown
In Class Test	In-Class Test	20%	Week 10
Formal Examination	End-of-Semester Final Examination	80%	End-of-Semester

Reassessment Requirement Type
Resit arrangements are explained by the following categories; RC1: A resit is available for both^* components of the module. RC2: No resit is available for a 100% coursework module. RC3: No resit is available for the coursework component where there is a coursework and summative examination element. ^* ‘Both’ is used in the context of the module having a coursework/summative examination split; where the module is 100% coursework, there will also be a resit of the assessment

Pre-requisite	None
Co-requisite	None
Compatibles	None
Incompatibles	None

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

Interest Rates
Nominal and effective rates of interest and discount; constant force of interest; simple equations of value; yield.

Basic Compound Interest Functions
Level, deferred and increasing annuities; present and future values; equations of value and yield.

Loans
Loan schedules; present values and accumulations; APR.

Discounted Cash Flow
Net cash flows; comparison of investment projects; net present values; yields; discounted payback period; real and money interest rates.

Indicative Reading List

Books:

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

Articles:
None

Other Resources

None