Checking date: 24/03/2023

Course: 2023/2024

Financial Mathematics
(13743)
Bachelor in Finance and Accounting (Plan: 399 - Estudio: 201)

Coordinating teacher: PENALVA ZUASTI, JOSE SEBASTIAN

Type: Basic Core
ECTS Credits: 6.0 ECTS

Course:
Semester:

Branch of knowledge: Engineering and Architecture

Objectives
Competences of Knowledge: - To identify the time value of the money as well as the classic forms of capitalization and discount (simple and compound). - To learn the typologies of annuities and their application in the valuation of financial products, and in the valuation of investment projects of the company. - To learn the elements of a loan and to calculate them. - To apply the financial concepts to new situations and new financial instruments that need to be pricing correctly. Skills: - We will develope the capacity of working independently. - Ability to analyze different situations. Attitudes: - To have an enthusiastic attitude and curiosity to solve problems or practices.
Skills and learning outcomes
Description of contents: programme
1.Introduction to financial mathematics 1.1. The time value of the money 1.2. Financial Operation. 1.3. Present and future value 1.4. Financial law 2.Capitalization 2.1. Simple and Compound Interest 2.2. Financial Factors 2.3. Capitalization and discounting 2.4. Financial Sum 2.5. The frequency of compounding 3.Interest Rates 3.1. Simple and Compound Interest Rate 3.2. Interest Rates and Capitalization Laws 3.3. Nominal and Effective APR 3.4. Forward and Spot Interest Rates 3.5. The Effective APR as a Comparison Tool 4.Financial operations 4.1. Types 4.2. Commercial Characteristics 5.Short term operations 5.1. Simple Commercial Discounting 5.2. Discounting Commercial effects 5.3. T-bills 5.4. Repurchase agreements (REPOs) 6.Annuities and Perpetuities 6.1. Concept of annuity 6.2. Classification 6.3. Constant annuities: immediate, deferred, anticipated 6.4. Varying annuities 6.5. Fractional annuities 7.Valuation of Stocks and Bonds 7.1. Pricing a bond 7.2. Valuation of perpetual debt 7.2. Pricing common stock 8.Loan repayments 8.1. Constant amortization of principal 8.2. American loan 8.3. French loan 8.4. Balance of a financial operation. Mathematical Reserve. Changing Interest Rates 8.5. Operations with grace periods
Learning activities and methodology
The competences of knowledge will be acquired by students through lectures and the resolution of tasks and exercises. While skills will be achieved through individual work by students. Students receive three types of teaching material during the course: 1) Technical Notes of theory, 2) Work to be done in practical classes, 3) self-evaluation exercises via the digital platform The tasks and exercises are linked to each of the parts that comprise the agenda as described in the detailed program.. Students will be motivated to likewise perform practical exercises correction prior to class.
Assessment System
• % end-of-term-examination 50
• % of continuous assessment (assigments, laboratory, practicals...) 50
Calendar of Continuous assessment
Basic Bibliography
• Chris Ruckman. Financial Mathematics: A Practical Guide For Actuaries And Other Business. BPP Professional Education; 2nd edition (August 2005).
• James W. Daniel. Mathematical Interest Theory. Mathematical Association of America; 2 edition (2008).

The course syllabus may change due academic events or other reasons.