# F78AA Actuarial and Financial Mathematics A

Course co-ordinator(s): Peter Ridges (Edinburgh), Dr Karamjeet Singh (Malaysia).

Aims:

This course aims to provide students with an introduction to the basic concepts and models of financial mathematics.

Summary:

• Simple interest
• Compound interest and discount
• Time units and effective rates of interest
• Accumulations and present values of discrete-time cashflows
• Varying rates of interest
• Annuities
• Yields
• Measuring rates of return
• Loan schedules
• Fixed-interest securities
• Discounted Cash Flows

## Detailed Information

Course Description: Link to Official Course Descriptor.

Pre-requisites: none.

Location: Edinburgh, Malaysia.

Semester: 1.

Learning Outcomes: Subject Mastery

At the end of studying this course, students should be able to:

• Describe the basic concepts of simple and compound interest.
• Calculate the present value or accumulation of any set of discrete-time cashflows, at constant or varying rates of interest
• Derive and use simple formulae for values of level and increasing annuities-certain
• Explain the concept of the yield on a series of cashflows, and its limitations
• Calculate time-weighted, money-weighted and internal linked rates of return
• Analyse loan schedules, including simple alterations
• Describe basic fixed-interest securities, and calculate prices and yields allowing for tax
• Understand, the discounted cash flow model and know what internal rates of return (IRR), net present values (NPV) and break-even durations are

Reading list:

• Garrett, S.J. (2013). An Introduction to the Mathematics of Finance (second edition). Butterworth-Heinemann.
• Zima, P. & Brown, R.L. (1996). Schaum’s Outline: Mathematics of Finance (Second Edition), McGraw Hill.

Assessment Methods:

There will be a two-hour end-of-course examination, contributing 90% of the total mark. During the second half of the semester there will be an Excel-based assignment counting for 10% of the total mark.

SCQF Level: 8.

Credits: 15.

## Other Information

Help: If you have any problems or questions regarding the course, you are encouraged to contact the lecturer

VISION: further information and course materials are available on VISION