Introduction to Financial Mathematics

  • Credits: 3
  • Ending: Examination
  • Range: 2C
  • Semester: summer
  • Year: 1
  • Faculty of Economics and Finance

Teachers

Included in study programs

Finance and Taxes

Teaching results

Knowledge: basic knowledge of financial mathematics and investing in common economic practice.
Skills: to orientate in four basic topics of financial mathematics (interest rate, annuity, repayment and financial flows).
Competences: to acquire new knowledge independently and to actively expand one's mathematical knowledge, realizing that knowledge of the methods of financial mathematics enables the use of funds in a more prudent and efficient way (decisions concerning financial flows, the benefits of concluding contracts, loans, securities trading, etc.).

Indicative content

The concept of interest. Simple interest. Math and trade discount. Compound interest. Relationship between simple and compound interest. Discounting compounded. Continuous interest. The theory of interest rates. The concept of financial annuities. Classification of loans. Redemption plan. Annuity redemption. Financial flows.

Support literature

HUŤKA, V., PELLER, F.: Finančná matematika v Exceli. Bratislava: IURA Edition, 2010.
PINDA, Ľ.: Finančná matematika I. Bratislava: Letra Edu, 2021.
ŠOBA, O., ŠIRŮČEK, M.: Finanční matematika v praxi. Praha: Grada, 2017.

Syllabus

1. The concept of interest. Simple interest. The calculation of basic variables. Exact and banks method. The timing diagrams. 2. Math and trade discounts. Financial equivalence principle. 3. Compound interest. Relationship between simple and compound interest. Mixed interest. Effective and nominal interest rate. 4. Discounting compounded. Equivalent to interest and discount rates. Rate of return on investment, net present value. 5. Continuous interest. Equivalent relations between the composite and continuous interest. Anticipative interest. 6. The theory of interest rates. Interest rates, interest and discount factor intensity as a function of time. 7. The concept of financial annuities, basic concepts and relationships. Decursive annuity. 8. Anticipative annuity. Deferred annuity, annuity suspended. 9. Infinity annuity, annuity with continuous interest. Classification of loans. The loan repayment premium. 10. Gradual repayment of a loan. Rules redemption. Redemption plan. Annuity redemption. 11. Repayment schedules redemption, redemption of bonds. 12. Financial flows. Evaluation of financial flows. 13. Evaluation of long-term securities.

Requirements to complete the course

40% semester paper,
60% written exam

Student workload

Participation in consultations – 26
Preparation for consultations– 16
Preparation for semester paper – 16
Preparation for exam – 20
Total study load – 78

Language whose command is required to complete the course

slovak

Date of approval: 10.02.2023

Date of the latest change: 15.05.2022