ACS 1531 - Financial Mathematics I

4 lecture hours 0 lab hours 4 credits

• Define and recognize the definitions of the following terms: interest rate (rate of interest), simple interest, compound interest, accumulation function, future value, current value, present value, net present value, discount factor, discount rate (rate of discount), convertible m-thly, nominal rate, effective rate, inflation and real rate of interest, force of interest, equation of value  
• Given any three of interest rate, period of time, present value, and future value, calculate the remaining item using simple or compound interest. Solve time value of money equations involving variable force of interest  
• Given any one of the effective interest rates, the nominal interest rate convertible m-thly, the effective discount rate, the nominal discount rate convertible m-thly, or the force of interest, calculate any of the other items
• Write the equation of value given a set of cash flows and an interest rate
• Define and recognize the definitions of the following terms: annuity-immediate, annuity due, perpetuity, payable m-thly or payable continuously, level payment annuity, arithmetic increasing/decreasing annuity, geometric increasing/decreasing annuity, term of annuity  
• For each of the following types of annuity/cash flows, given sufficient information of immediate or due, present value, future value, current value, interest rate, payment amount, and term of annuity, calculate any remaining item
• Define and recognize the definitions of the following terms: principal, interest, term of loan, outstanding balance, final payment (drop payment, balloon payment), amortization   
• Define and recognize the definitions of the following terms: price, book value, market value, amortization of premium, accumulation of discount, redemption value, par value/face value, yield rate, coupon, coupon rate, term of bond, callable/non-callable, call price, call premium, accumulated value with reinvestment of coupon  

• Basic algebra

• Time value of money
• Annuities/cash flows with non-contingent payments
• Loans
• Bonds