BKF_FIMA Financial Mathematics

Faculty of Economics and Administration
Autumn 2014
Extent and Intensity
0/0. 6 credit(s). Type of Completion: zk (examination).
Teacher(s)
Ing. Luděk Benada, Ph.D. (lecturer)
Guaranteed by
Ing. Luděk Benada, Ph.D.
Department of Finance – Faculty of Economics and Administration
Contact Person: Iva Havlíčková
Supplier department: Department of Finance – Faculty of Economics and Administration
Timetable
Sat 4. 10. 12:50–16:15 P102, Sat 25. 10. 12:50–16:15 P102, Sat 8. 11. 12:50–16:15 P102
Prerequisites (in Czech)
! KFFMFP Financial Mathematics for FP
Course Enrolment Limitations
The course is also offered to the students of the fields other than those 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 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. Concept of interest and its calculation, interest period, single interest after-term and before-term, interest number and interest divisor.
  • 3. Discount factor, concept 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-tem, 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 in 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 on bonds.
  • 12. Characteristic of assets I. Tangible assets, intangible assets, expected return on assets, risk of changes of return on assets, non-risk assets
  • 13.Characteristic of assets II. Estimation of expected rate of return and risk of asset by historical method and by expert method.
Literature
    required literature
  • BUCHANAN, J. Robert. An undergraduate introduction to financial mathematics. 3rd ed. New Jersey: World Scientific, 2012, xviii, 464. ISBN 9789814407441. info
  • PETERSON DRAKE, Pamela and Frank J. FABOZZI. Foundations and applications of the time value of money. Hoboken, N.J. ?: John Wiley & Sons, 2009, xvii, 298. ISBN 9780470407363. info
  • ČERVINEK, Petr and František ČÁMSKY. Finanční matematika - Distanční studijní opora. 2009, 91 pp. info
    recommended literature
  • RADOVÁ, Jarmila, Petr DVOŘÁK and Jiří MÁLEK. Finanční matematika pro každého. 7. aktualiz. vyd. Praha: Grada, 2009, 293 s. ISBN 9788024732916. info
  • CIPRA, Tomáš. Finanční a pojistné vzorce. 1. vyd. Praha: Grada, 2006, 374 s. ISBN 802471633X. 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= 92 – 100 %
B= 84 – 91 %
C= 76 – 83 %
D= 68 – 75 %
E= 60 – 67 %
F= less than 60 %

Any copying, recording or leaking tests, use of unauthorized tools, aids and communication devices, or other disruptions of objectivity of exams (credit tests) will be considered non-compliance with the conditions for course completion as well as a severe violation of the study rules. Consequently, the teacher will finish the exam (credit test) by awarding grade "F" in the Information System, and the Dean will initiate disciplinary proceedings that may result in study termination.
Language of instruction
Czech
Further comments (probably available only in Czech)
Study Materials
The course is taught annually.
General note: Nezapisují si studenti, kteří absolvovali předmět KFFMFP.
Credit evaluation note: k=1,33.
Information about innovation of course.
This course has been innovated under the project "Inovace studia ekonomických disciplín v souladu s požadavky znalostní ekonomiky (CZ.1.07/2.2.00/28.0227)" which is cofinanced by the European Social Fond and the national budget of the Czech Republic.

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The course is also listed under the following terms Autumn 2009, Autumn 2010, Autumn 2011, Autumn 2012, Autumn 2013, Autumn 2015, Autumn 2016, Autumn 2017, Autumn 2018, Autumn 2019, Autumn 2020, Autumn 2021, Autumn 2022, Autumn 2023, Autumn 2024.
  • Enrolment Statistics (Autumn 2014, recent)
  • Permalink: https://is.muni.cz/course/econ/autumn2014/BKF_FIMA