FIN 3910 - FINANCIAL MATHEMATICS

credits: 3.0
Is a one-term course introduction to the mathematics used in finance. Will start with a brief overview of the financial theory covered in FIN 3010, and then a review of the basic mathematics needed to prepare for the more complex math used specifically in financial theory. A large portion of the class will be devoted to algebra and algebraic manipulations, to give students the critical thinking skills they need. Those skills will be further developed by applying the algebra to word problems from the material covered in FIN 3010. An algorithm useful for solving word problems will be introduced. The basic theory of matrix algebra will be covered as well. The applications for the math within financial theory will be reviewed. Applications will include the time value of money, risk and return, and portfolio theory. Objectives: A) Use the proper order of arithmetic operations in solving equations; B) Define the financial constant e and show how it is used in financial theory; C) Calculate the mathematics of time value using both discrete and continuous time; D) Transform analytical problems into equations and then solve the equations; E) Calculate returns and risk for a single investment vehicle; F) Calculate returns and risk for a diversified portfolio of investments; G) Perform simple matrix operations to calculate portfolio metrics. Method of Instruction: Lecture, classroom lab work, and homework assignments. Method of Evaluation: Homework Sets 30%, Exams (two @ 35%) 70%.

Prerequisite(s): FIN 3010 - FINANCIAL MANAGEMENT