Financial Mathematics - Theory of Interest & Cashflow Models
By MJ the Fellow Actuary
Description
This course requires no prior knowledge on financial concepts and we will go through the main financial instruments one at a time. We will also look at the Time Value of Money, the Theory of Interest Rates and the Discounted Cash Flow Model. This is an introductory course for people who want to pursue careers in Actuarial Science, CFA, FRM, etc. A mathematical background will be advantageous.
Section 1
What is Finance and Why do we have finance?
What are Interest and Inflation Rates?
Why are Financial Transactions complicated?
Section 2
Introduction to Financial Instruments
Zero Coupon Bond
Fixed Interest Security
Index Linked Security
Equity
Annuity
Insurance Products
Section 3
Theory of Interest - Basic
Power of Interest Rates
Discount Rates
Basic Actuarial Notation
Section 4
Theory of Interest - Advanced
Money Rates vs Real Rates
Nominal Rates vs Effective Rates
Force of Interest
Force of Interest as a Function of time
Section 5
Actuarial Notation
Discounting Factor
Annuity Certain
Annuity in Advance
Deferred Annuity
Annuities payable pthly
Annuities payable continuously
Perpetuities
Increasing Annuities
Section 6
Term Structure of interest rates
Spot Rates
Forward Rates
Theories on Yield Curves
Yield to Maturity
Par Yield
Immunisation
Section 7
Equation of Value
Linear Interpolation
Section 8
Loan Schedules
Section 9
Project Appraisal
Section 10
Stochastic Interest Rate Models
Lognormal Interest Rate Models
Single Factor Models
Ho-Lee
Vasicek
Hull-white
Cox-Ingress-Ross
Section 11
Exam Questions
What You Will Learn!
- Introduction to Finance
- Interest Rates
- Financial Instruments
- Zero Coupon Bonds
- Annuities
- Discount Rates
- Actuarial Notation
- Force of Interest as a Function of Time
- Term Structure of Interest Rates
- Loan Schedules
- Project Appraisal
- Stochastic Interest Rate Models
Who Should Attend!
- Students wanting to enter financial professions such as Actuary, CFA, FRM, etc
- Exams FM, CM1, A211