KFFMFP Financial Mathematics for FP

Faculty of Economics and Administration
Autumn 2008
Extent and Intensity
0/0. 4 credit(s). Type of Completion: zk (examination).
Teacher(s)
Mgr. Petr Červinek (lecturer)
Guaranteed by
prof. Ing. Jiří Dvořák, DrSc.
Department of Finance – Faculty of Economics and Administration
Contact Person: Iva Havlíčková
Timetable
Sat 11. 10. 8:30–14:30 P101, Sat 29. 11. 12:50–17:55 P102, 12:50–17:55 P103
Course Enrolment Limitations
The course is only offered to the students of the study fields the course is directly associated with.
fields of study / plans the course is directly associated with
Course objectives
This course consists of definition of the subject, conceptions and methods, basic maths, which is necessary for understanding and defining models of forming relations of financial mathematics, such as simple and compound interest, short-term and long-term savings, pensions and credits, checking accounts interest and bank overdrafts interest. The course provides students with the basics of calculating market price of bonds and securities which can serve as a ground for follow-up courses Analysis of bonds, Derivatives of financial markets, Theory of portfolio and Insurance mathematics I, II. The course is drawn up to explain fundamental relations and individual expressions for the needs of other courses.

The main objectives of the course are the following:
- understanding fundamentals of financial mathematics, understanding principles of interest, use of interest in fundamental areas of financial mathematics;
- applying acquired knowledge to the related areas which are not discussed within this course.
Syllabus
  • Thematic plan – lectures:
  • 1. Revision of basic concepts of mathematics (percentage calculation, linear function, exponential function, logarithmic function, calculations with logarithms, sequences and series, means).
  • 2. Single interest. Conception of interest and its calculation, interest period, single interest after-term and before-term, interest number and interest divisor.
  • 3. Discount factor, conception of discount, business (bank) and mathematical discount and their comparison.
  • 4. Compound interest, combination of single and compound interest. Calculation of deposit period, initial capital and interest rates.
  • 5. Nominal and real interest rate. Effective interest rate, interest intensity. Short-term savings after term before-term.
  • 6. Savings long-term before-term, after-term, combination of short-term and long-term savings. Calculation of initial value, calculation of saving period, interest rate.
  • 7. Pensions. Issue of pensions. Pensions immediate after-term, before-term, pensions paid m-times a year.
  • 8. Pensions postponed before-term, after-term. Perpetual pensions after-term, before-term. Retirement income insurance.
  • 9. Extinguishing debts. Extinguishing debts by unequal repayments, extinguishing debts by equal annuities, determination of number of annuities, determination of debt residue, comparison of extinguishing method with method of decreasing fund, changes of redemption condition - summary method.
  • 10. Methods of interest of checking accounts, bank overdrafts, their usage and interest running.
  • 11. Exchange operations and compound interest. Determination of bond prices, simplified procedure of determination of bond prices, determination of bond prices between coupon dates, estimation of expected rate of return of bonds.
  • 12. Characteristic of assets. Tangible assets, intangible assets, expected return on assets, risk of changes in return on assets, non-risk assets, estimation of expected rate of return and risk of asset by historical method and by expert method.
  • 13. Revision of discussed topics.
Literature
  • CIPRA, Tomáš. Finanční a pojistné vzorce. 1. vyd. Praha: Grada, 2006, 374 s. ISBN 802471633X. info
  • DVOŘÁK, Petr and Jiří MÁLEK. Finanční matematika pro každého. Edited by Jarmila Radová. 5. zcela přeprac. vyd. Praha: Grada, 2005, 286 s. ISBN 802471230X. info
  • CHÝNA, Vladislav and Jiří MÁLEK. Finanční matematika v příkladech. Edited by Jarmila Radová. 1. vyd. Praha: Professional Publishing, 2005, 160 s. ISBN 808641986X. info
  • ČÁMSKÝ, František. Finanční matematika -distanční studijní opora. I. Brno MU: Masarykova univerzita, 2004, 124 pp. ISBN 80-210-3479-3. info
  • CIPRA, Tomáš. Finanční matematika v praxi. 1. vyd. Praha: HZ, 1993, 166 s. ISBN 80-901495-1-0. info
Assessment methods
Students will work out a semester paper referred to as a POT which they are supposed to submit the day before the last tutorial at the latest.
An in-term test will be written during the last tutorial (the test will consist of all topics from previous tutorials). If students are unable to write an in-term test or if students fail the test, they can write a substitute test, but no more than one.
The date of the substitute test will be unified for all students and only one term will be announced.
The exam is written and oral.
The prerequisite for taking part in the exam is an accepted semester paper (POT) and passing the in-term test (minimum to pass is 50 %).

The final exam is comprised of:
Evaluation of the in-term test (25 %) + evaluation of written part of the exam (50 %) + evaluation of the oral part of the exam (25 %)

The grading scheme used for evaluation of students’ knowledge is the following:
A= 91 – 100 %
B= 84 – 90 %
C= 76 – 83 %
D= 68 – 75 %
E= 60 – 67 %
F= less than 60 %

Important information! If student commits a prohibited act, such as usage of various forbidden tools, cribbing, taking out any part of the exam or any other cheating, teacher is allowed to interrupt an exam and to grade a student with F, FF or FFF according to the seriousness of the offence. Mentioned procedure relates to all the activities that are included to the final evaluation of the course (seminar work, essays, tests etc.)
Language of instruction
Czech
Further comments (probably available only in Czech)
The course can also be completed outside the examination period.
The course is taught annually.
The course is also listed under the following terms Autumn 2007.
  • Enrolment Statistics (recent)
  • Permalink: https://is.muni.cz/course/econ/autumn2008/KFFMFP