Math  3340,   Introduction to Fixed Income Mathematics,  Fall 2017

Classes are Tu-Th 10 - 11.15am in SEC 202.

My office is PGH 696 and Office hours are Tu - Th 1-2pm or by appointment.
Office telephone is 713-743-3475.

The prerequisite for the class is Calculus II or equivalent.
That is  you need to know about algebraic formulae, take derivatives, use 1-variable  calculus.

The aim of the course  is to describe, understand and work with the essential formulae for
calculations involving interest. There is no  text-book for the class but notes on many
 topics will be posted here.

The course does not treat any probabilistic models. Rather it treats financial models where an
outcome is "guaranteed". This means that one obtains formulae for various situations
- such as mortgage or other loan interest payments - and then looks at how the "numbers" change when
the conditions of the loan (interest rates, number of payments, principal etc) change

The theory of compound interest is closely related to many different issues related to exponential
growth and also to logarithms - which are the inverse functions to exponential functions.

The course will concentrate on the valuation  of loans, mortgages  and bonds  of various  types. 
Spreadsheet  modeling of bond payments and loans will be described. Leverage calculations
and some portfolio analysis will be explained.
The course covers most of the topics in one of the first actuarial exams.

The homework problems will require that you be able to work with spreadsheets on a computer.
 LibreOffice or  Microsoft Excel are good choices

The answers to the first homework may be found here .
The grader's answers for Homeworks 2 and 3 are here and here.

There will be an, in-class, mid-term exam on Tuesday October 17th and a (comprehensive)  final exam  is
scheduled on Tuesday December 12th from 11 to 1.30pm. Homework sets will be given on a regular basis
and will require use of  spreadsheet programs. Grades will be based 30% on homeworks, 30% for the mid-term
exam and 40% for the final exam. There will not be any make-up exams; see me beforehand if you are likely
 to have scheduling conflicts for an exam.

 To learn more about being an actuary,  google actuary. To see what an actuarial undergraduate
 program entails and how this course fits into the actuarial exams, look at the web page for the
UT actuarial program at

If you have any questions, please call me at 713-743-3475 or send e-mail to

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