Course detail

Financial and Insurance Mathematics

FP-VfpmPAcad. year: 2013/2014

Cross-section of modern methods of financial and insurance calculations as they are applied in financial and insurance practice: types of interest rates, savings, income, systems of financial flows, investment rules, stocks, bonds, debt amortization, financial risk, financial portfolio management, financial analysis, basic insuranceprinciples calculations in life insurance, pension insurance.

Language of instruction

Czech

Number of ECTS credits

6

Mode of study

Not applicable.

Learning outcomes of the course unit

After completion of the course, student is able to understand the principle and function of financial decision-making and management with support of applied methods in financial mathematics. He will be able to:
a) Apply methods of financial mathematics (interest running, discount, savings, earnings)
b) Compare interest rates for various interest periods
c) Evaluate investment projects
d) Apply various measures of financial analysis
e) Be well versed in repayment of a loan
f) Calculate market price of obligations and stocks
g) Calculate cross rate and forward exchange rate
h) Solve insurance operations

Prerequisites

Knowledge of the solution of equations, graphical presentation various functions in different contexts and rasters graphs with numerical expression, the issue of arithmeticand geometric sequences and infinite geometric series. Working with mathematicalsoftware. Orientation in basic economic categories.

Co-requisites

Not applied.

Planned learning activities and teaching methods

The course contains lectures that explain basic principles, problems and methodology of the discipline, and exercises that promote the practical knowledge of the subject presented in the lectures.

Assesment methods and criteria linked to learning outcomes

Conditions for awarding the course-unit credit:
1. Professional activity is indicative of student preparation for seminars (evaluated by the teacher) – max. 10 points.
2. Successful completion of a test at pre-determined schedule date – max. 20 points. Students have right to use one regular and one repetative term of the test.
3. The total number of points for credit must be higher than 18 points.

Conditions for exam:
Knowledge of taught topics and its practical application. Form of examination: Combined – a written test and an oral examination if necessary. Written test – 45 minutes, two theoretical questions and one arithmetical problem. For the test are admitted only students who are logged in to the BUT system and who have written results of test in BUT system. Classification of a test is part of the overall evaluation of the course with a weight of 0.33. Classification methods depend on the BUT Rules for Studies and Examinations using the ECTS grading scale. The overall classification of "E - sufficient", classification is needed answers to theoretical questions and solving example at least a grade of "E", it means, the answer is correct, but there are some significant parts; solution example is correct, but contains a numerical error.

Course curriculum

1. Simple and compound interest payment. Effective interest rate. Intensity of interest. Nominal and real interest rate.
2. Savings – short-term, long-term and their combination.
3. Income – income calculation. Temporary income. Real income.
4. Discount. Time value. Investment decision-making – rules and criteria.
5. Bonds and their evaluation. Bonds price sensitivity.
6. Loans. Extinction of a debt. Annuity. Instalment plan. Leasing.
7. Stocks, obligations. Market price of stock. Stock profitability. First option and its price. Short-term stocks and bonds.
8. Currency rates – cross rate and forward exchange rate.
9. Financial analysis – trend analysis. Time series of measures.
10. Financial analysis – analysis of proportional measures.
11. Financial risk. Portfolio theory and its analysis.
12. Financial strategy – structure of firm capital and its optimization. Economic value added.
13. Elementary calculation in life and pension insurance.

Work placements

Not applicable.

Aims

The aim of the course is to acquaint students with basic concepts and relations in the field of financial mathematics and mathematical methods in modern finance, with real examples and practical knowledge.

Specification of controlled education, way of implementation and compensation for absences

Lecture: Attendance at lectures is not compulsory, but is recommended.

Exercise: Check the results of independent work on assigned tasks. Attendance at seminars is required and checked by the tutor. In case of excused absence from seminars, the teacher can set additional condition if appropriate, usually elaboration of partial written task.

Recommended optional programme components

Not applicable.

Prerequisites and corequisites

Not applicable.

Basic literature

Not applicable.

Recommended reading

Not applicable.

Classification of course in study plans

  • Programme BAK-KME Bachelor's

    branch BAK-MME , 3 year of study, summer semester, compulsory

Type of course unit

 

Lecture

26 hod., optionally

Teacher / Lecturer

Syllabus

1. Structure of the course. Organization of study and exams. Basic terminology and relations. Simple and compound interest payment. Effective interest rate. Intensity of interest. Nominal and real interest rate.
2. Savings – short-term, long-term and their combination.
3. Income – income calculation. Temporary income. Real income.
4. Discount. Time value. Investment decision-making – rules and criteria.
5. Bonds and their evaluation. Bonds price sensitivity.
6. Loans. Extinction of a debt. Annuity. Instalment plan. Leasing.
7. Stocks, obligations. Market price of stock. Stock profitability. First option and its price. Short-term stocks and bonds.
8. Currency rates – cross rate and forward exchange rate.
9. Financial analysis – trend analysis. Time series of measures.
10. Financial analysis – analysis of proportional measures.
11. Financial risk. Portfolio theory and its analysis.
12. Financial strategy – structure of firm capital and its optimization. Economic value added.
13. Elementary calculation in life and pension insurance.

Exercise

13 hod., compulsory

Teacher / Lecturer

Syllabus

1. Organization of study. Simple and compound interest payment.
2. Income – income calculation. Temporary income. Real income.
3. Loans. Extinction of a debt. Annuity. Instalment plan. Leasing.
4. Break-even point analysis. Structure of firm capital and its optimization. Economic value added.
5. Investment strategy - rules and measures. Time value.
6. Test.
7. Unit credits.