Financial Mathematics ( Powerpoint)

The Financial Mathematics course is designed to introduce students to the essential mathematical concepts and techniques used in finance, with a focus on practical applications in personal finance, investments, and risk management. Over the span of 12 weeks, students will develop a strong understanding of how mathematics is applied in various financial contexts, enabling them to make informed financial decisions.

The course begins with an introduction to the time value of money (TVM), a foundational principle that underlies many financial calculations. Students will learn the difference between simple and compound interest and how to calculate present and future values. This concept sets the stage for understanding how money grows over time and its implications in real-world scenarios such as investments, loans, and savings.

As the course progresses, students delve deeper into interest rates, exploring both nominal and effective interest rates and how inflation impacts financial calculations. This will enable students to understand the importance of real vs. nominal interest rates in making sound financial choices.

A significant portion of the course is dedicated to annuities and perpetuities, where students will explore different types of annuities and their applications in financial planning. They will gain practical skills in calculating the present and future values of annuities, learning how these tools are used in areas like retirement planning and loan repayments.

Loan amortization and bond valuation are also key topics covered in the course. Students will learn how to construct amortization schedules and understand the factors influencing bond prices, yields, and risk levels. This knowledge is critical for anyone involved in personal or corporate finance, as it allows for effective debt management and investment analysis.

The course further introduces students to the principles of investment analysis and portfolio mathematics. Students will explore concepts such as expected return, risk, diversification, and the efficient frontier, all of which are crucial for constructing and managing investment portfolios.

An introduction to derivatives and option pricing provides students with an understanding of more advanced financial instruments. They will explore basic options pricing models, such as the binomial model and Black-Scholes, allowing them to evaluate the value of financial options and understand their role in hedging and speculation.

Finally, the course covers risk management and insurance mathematics, helping students assess financial risk and apply mathematical techniques to minimize potential losses. Students will learn key risk measures like Value at Risk (VaR) and explore how insurance and risk pooling can mitigate risk.

Throughout the course, students will engage in hands-on exercises, case studies, and real-life applications to strengthen their problem-solving skills. By the end of the course, students will have a comprehensive understanding of financial mathematics, enabling them to apply these skills in their personal finances, professional roles, or advanced studies in finance.

The course will conclude with a final assessment, which may include a combination of a final exam and a practical project, allowing students to demonstrate their understanding of the key concepts learned throughout the course.

This Financial Mathematics course is ideal for students interested in careers in finance, banking, investment analysis, or anyone looking to enhance their personal financial decision-making skills