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Module Specifications

Archived Version 2008 - 2009

Module Title Mathematics of Finance:An Introduction
Module Code MS216
School School of Mathematical Sciences

Online Module Resources

Module Co-ordinatorProf John CarrollOffice NumberX139
Level 2 Credit Rating 5
Pre-requisite None
Co-requisite None
Module Aims
  • To introduce students to the mathematics of finance.
  • To provide students with a grounding in elements of financial mathematics and its related applications.


Learning Outcomes
  • A good understanding of interest rates and annuities.
  • The ability to evaluate simple loans and mortgages.
  • The ability to work with various forms of interest and discount rates and the basic compound interest functions in order to value cash flows.


Indicative Time Allowances
Hours
Lectures 24
Tutorials 11
Laboratories 0
Seminars 0
Independent Learning Time 40
Total 75
Placements
Assignments
NOTE
Assume that a 5 credit module load represents approximately 75 hours' work, which includes all teaching, in-course assignments, laboratory work or other specialised training and an estimated private learning time associated with the module.

Indicative Syllabus

Indicative Lecture hours given in < > below:

Interest Rates < 4 >: nominal rates of interest and discount; constant force of interest; simple equations of value; yield. [CT1 - (i) to (iii)]

Basic Compound Interest functions < 8 >: level, deferred and increasing annuities; present and future values; equations of value and yield. [CT1 - (v) to (vii)]

Loans & Annuities Payable phtly < 6 >: Loan schedules; annuities payable phtly; present values and accumulations; APR. [CT1 - (vi) & (viii)]

Discounted Cash Flow < 6>: net cash flows; comparison of investment projects; net present values; yields; discounted payback period; real and money interest rates. [CT1 - (iv) & (ix)]

Assessment
Continuous Assessment20% Examination Weight80%
Indicative Reading List
  • ActEd Study Materials: Subject CT1 Course Notes, The Actuarial Education Company (on behalf of the Institute of Actuaries and the Faculty of Actuaries). (Essential for Actuarial Mathematics students).
  • An Introduction to the Mathematics of Finance, JJ McCutcheon and W E Scott, Published by the Institute of Actuaries & the Faculty of Actuaries, Butterworth - Heinemann 1999. ISBN 0 7506 0092.

 

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