Module: Financial Mathematics

Latest Module Specifications

Current Academic Year 2025 - 2026

Module Title	Financial Mathematics
Module Code	MTH1052 (ITS: MS318)
Faculty	Mathematical Sciences	School	Science & Health
NFQ level	8	Credit Rating	7.5

Description

MS318 builds on the material of MS216 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. The course also provides an introduction to financial instruments, including derivatives, and the concept of `no arbitrage' as it relates to financial mathematics. The combined syllabi of MS216 and MS318 map fully onto the 14 objectives of CT1: Financial Mathematics.

Learning Outcomes

1. Demonstrate attainment of the learning outcomes of MS216: An Introduction to the Mathematics of Finance
2. Interpret and solve problems relating to real and money interest rates
3. Describe the investment and risk characteristics of certain types of asset available for investment purposes.
4. Describe and solve elementary compound interest problems.
5. Calculate the delivery price and the value of a forward contract using arbitrage free pricing methods.
6. Interpret and solve problems relating to the term structure of interest rates.
7. Interpret and solve problems relating to simple stochastic models for investment returns.

*Type*	*Hours*	*Description*
Workload	Full time hours per semester
Lecture	36	Presentation of course material
Tutorial	11	Working from supplied tutorial sheets
Total Workload: 47

Section Breakdown
CRN	11218	Part of Term	Semester 1
Coursework	0%	Examination Weight	0%
Grade Scale	40PASS	Pass Both Elements	Y
Resit Category	RC1	Best Mark	N
Module Co-ordinator	Mary Hall	Module Teacher

Type	Description	% of total	Assessment Date
Assessment Breakdown
In Class Test	A 55-minute closed-book examination from a supplied set of questions.	25%	Week 10
Formal Examination	End-of-Semester Final Examination	75%	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

Review of MS216
A review of the syllabus topics of MS216: An Introduction to the Mathematics of Finance, but also with the additional topics of variable force of interest and weighted rates of return (under Project Appraisal). CT1: (i) to (ix)

Investments
Fixed interest borrowings by government and other bodies; shares and other equity-type finance; derivatives. CT1: (x)

Simple Compound Interest Problems
Fixed Interest Securities; Running yields and redemption yields; present value or yield from an ordinary share or property; real rate of interest; index-linked bonds; income tax, capital gains tax and investments. CT1: (iv) & (xi)

Arbitrage & Forward Contracts
Calculating the price with or without fixed income and dividend yield; value of a forward contract; hedging. CT1: (xii)

Term Structure of Interest Rates
Yield (par and to maturity); spot and forward rates; duration, volatility and convexity; immunization. CT1: (xiii)

Stochastic Interest Rate Models
Mean and variance of independent and identically distributed annual rates of return; log-normal distribution; probability calculations. CT1: (xiv)

Indicative Reading List

Books:

ActEd Study Materials: 0, Subject CT1 Course Notes, Actuarial Education Company,
JJ McCutcheon and W E Scott: 1999, An Introduction to the Mathematics of Finance, Butterworth-Heinemann, 0 7506 0092

Articles:
None

Other Resources

1: Webpage, John Carroll, MS318 Tutorial Sheets & Exam Papers,