Financial Calculus

Recommended Prerequisites

It is convenient that the students have finished the Mathematics disciplines, namely knowledge of series.

Teaching Methods

This course is lectures in theoretical and practical classes. In the theoretical classes the concepts are presented and the logical reasoning that supports the financial operations. In the practical classes several examples are solved showing situations similar to those the students are going to find in the real life. Also, in these classes the teacher incentive the student to participate in solution and discussions of the problems that deserve a particular attention. 

Learning Outcomes

Overall objectives:

The objectives of this course is to give the students the necessary mathematic understanding of the short, medium and long term financial operations, in order to be able to make correct financial decisions both for companies and individuals.

Specific objectives:

It is expected that the students be able to solve problems involving capital flows in different periods of time, to build plans for loans and bonds reimbursements, to understand the financial implications due to changes in the financial contracts, and to calculate the different yields associated with these operations.

Generic competencies:

To give the students the logic mathematic understanding applied to financial operations.

Specific competencies:

After finishing this course the students should be able to define and to solve the problem of choosing the best financial or application alternative for the company or individual investor.

Work Placement(s)

No

Syllabus

1. Capitalization and discount

Capitalization

Discount

Equivalence of interest rates

Simultaneous capitals

2. Annuities certain

Integer and constant annuities

Annuities in arithmetic acceleration

Annuities in geometric acceleration

Fractional annuities

3. Amortized loans

Description

The different modalities of loan’s reimbursement

4. Bonds loans

The mathematical description

The different modalities of a bonds loan’s reimbursement.

Yields associates with a bonds’ loan

Basic model for the determination of a bond value

5. Investment analysis

The different criteria for investment analysis

The analysis of a single investment

The choice among several investments

Head Lecturer(s)

Mário António Gomes Augusto

Assessment Methods

Assessment
Periodic or by final exam as given in the course information: 100.0%

Bibliography

Lisboa, João Veríssimo ; Augusto, Mário Gomes (2018), Cálculo financeiro, 2.ª Ed. Revista e Atualizada, Vida Económica – Editorial, S.A., Porto.

 

Quelhas, Ana Paula Santos; Correia, Fernando (2017), Manual de matemática financeira, 4.ª Ed. Revista, Almedina, Coimbra.