KC6001 - Financial Mathematics

You will learn through a combination of lectures and skills periods focussing on problem solving where you will be able to obtain help. Lectures allow students to experience and understand the formalism of the required mathematical techniques as well as include relevant examples and guided in-class exercise-solving sessions between more theoretical expositions. Students have an opportunity to enhance their understanding of the subject through exercises which promote both independent learning and problem solving within peer groups. The exercise classes will also be an opportunity to present you with open research problems, and will strengthen your transferable skills and employability. Northumbria’s computer labs and facilities are fully equipped with the latest industry-standard software such as Matlab, Excel and others, which will be used to support independent study and learning. Further technology-enhanced resources such as e-lecture notes, seminar sheets with answers and solution and past-paper questions will be provided via the e-learning portal.

In addition to academic contact with the module team during lectures and exercise classes, students are encouraged to develop their curiosity by making direct contact with the module team either via email or the open-door policy operated throughout the programme. Students will also be regularly referred to supporting resources including relevant texts and relevant multimedia materials. References to these resources will be made available through the e-learning portal and in lectures and seminars.

All modules at Northumbria include a range of reading materials that students are expected to engage with. Online reading lists (provided after enrolment) give you access to your reading material for your modules. The Library works in partnership with your module tutors to ensure you have access to the material that you need.

Knowledge & Understanding:
1. Apply equation of value in the context of the discounted cash flow model (KU1);
2. Compose appropriate models for valuating securities (KU2, KU3);
3. Understand and apply the theory of interest rates (KU3).

Intellectual / Professional skills & abilities:
4. Perform project appraisal and evaluate the performance of the project/company on a stock market (IPSA1, IPSA2, IPSA3).

Personal Values Attributes (Global / Cultural awareness, Ethics, Curiosity) (PVA):
5. Increases proficiency and independence in exploiting rigorous mathematical techniques to study economical and financial problems (PVA1, PVA3, PVA4).

SUMMATIVE
1. Coursework (30%) – 1, 3, 4, 5
2. Examination (70%) – 1, 2, 3, 5

FORMATIVE
Exercise Classes – 1, 2, 3, 4, 5

Students will be assessed by two formal assessments with weights 30% (coursework) and 70% (exam) respectively. The examinations will cover all topics from the module.

Formative feedback will be provided on seminar work which will include problems designed to aid student understanding.

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The module will introduce you to the concepts and terminology of financial mathematics and modelling in finance. You will learn properties of interest rates and the key tools of compound interest functions for modelling a range of annuity schemes. The module develops models for life insurance and endowment schemes and enables the students to analyse the behaviour of share prices. The generalised cash-flow model is introduced to describe financial transactions. You will learn how to develop simple models of financial instruments such as bonds and shares, enhancing skills that are essential to your future careers and/or postgraduate study. You will be assessed by course work in the form of individual assignment (30%) and by a written, closed-book examinations (70%). The examination will cover all topics from the module.