Financial Mathematics - Theory Of Interest & Cashflow Models

By MJ the Fellow Actuary

What you'll 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
Requirements
High schools maths is required
Simple Integration is needed
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 1What is Finance and Why do we have finance?What are Interest and Inflation Rates?Why are Financial Transactions complicated?Section 2Introduction to Financial InstrumentsZero Coupon BondFixed Interest SecurityIndex Linked SecurityEquityAnnuityInsurance ProductsSection 3Theory of Interest - BasicPower of Interest RatesDiscount RatesBasic Actuarial NotationSection 4Theory of Interest - AdvancedMoney Rates vs Real RatesNominal Rates vs Effective RatesForce of InterestForce of Interest as a Function of timeSection 5Actuarial NotationDiscounting FactorAnnuity CertainAnnuity in AdvanceDeferred AnnuityAnnuities payable pthlyAnnuities payable continuouslyPerpetuitiesIncreasing AnnuitiesSection 6Term Structure of interest ratesSpot RatesForward RatesTheories on Yield CurvesYield to MaturityPar YieldImmunisationSection 7Equation of ValueLinear InterpolationSection 8Loan SchedulesSection 9Project AppraisalSection 10Stochastic Interest Rate ModelsLognormal Interest Rate ModelsSingle Factor ModelsHo-LeeVasicekHull-whiteCox-Ingress-RossSection 11Exam Questions

Overview

Section 1: Introduction to Finance

Lecture 1 Introduction to Finance

Lecture 2 Financial Transactions

Lecture 3 Interest and Inflation Rates

Lecture 4 How to use the HP12c

Section 2: Introduction to Financial Instruments

Lecture 5 Introduction to Financial Instruments

Lecture 6 Zero Coupon Bonds

Lecture 7 Fixed Interest Securities

Lecture 8 Index Linked Securities

Lecture 9 Annuities

Lecture 10 Equity

Lecture 11 Insurance Products

Section 3: Theory of Interest - Basic

Lecture 12 Theory of Interest - Basic

Lecture 13 Power of Interest Rates

Lecture 14 Discount Rates

Lecture 15 Actuarial Notation - Basic

Section 4: Theory of Interest - Advanced

Lecture 16 Theory of Interest - Advanced

Lecture 17 Money Rates vs Real Rates

Lecture 18 Nominal Rates vs Effective Rates

Lecture 19 Force of Interest

Lecture 20 Recap of Integration

Lecture 21 Force of Interest as a Function of Time

Lecture 22 Example of Force of Interest as a Function of Time

Section 5: Actuarial Notation

Lecture 23 Introduction to Actuarial Notation

Lecture 24 Discounting Factor

Lecture 25 Annuity Certain

Lecture 26 Annuity in Advance

Lecture 27 Deferred Annuities

Lecture 28 Annuities payable pthly

Lecture 29 Annuities payable continuously

Lecture 30 Perpetuity

Lecture 31 Increasing Annuities

Section 6: Equations of Value

Lecture 32 Equations of Value

Lecture 33 Linear Interpolation

Section 7: Loan Schedules

Lecture 34 Loan Schedules

Section 8: Project Appraisal

Lecture 35 Project Appraisal

Section 9: Term Structure of Interest Rates

Lecture 36 Term Structure of Interest Rates

Lecture 37 Spot Rates

Lecture 38 Forward Rates

Lecture 39 Theories on the Yield Curves

Lecture 40 Yield to Maturity

Lecture 41 Par Yields

Lecture 42 Immunisation

Section 10: Advanced Interest Rate Models

Lecture 43 Stochastic Interest Rate Models

Lecture 44 Lognormal Interest Rate Model

Lecture 45 Single Factor Interest Rate Models

Section 11: Exam Questions

Lecture 46 Question 1 - Simple Discount Rate

Lecture 47 Question 2 - Interest Rate

Lecture 48 Question 3 - Level Annuities

Lecture 49 Question 4 - Increasing Annuity

Lecture 50 Question 5 - Loan Schedules

Students wanting to enter financial professions such as Actuary, CFA, FRM, etc,Exams FM, CM1, A211