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
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.
If you have any questions, please call me at 713-743-3475 or
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