- Docente: Roberto Dieci
- Credits: 4
- SSD: SECS-S/06
- Language: Italian
- Teaching Mode: Traditional lectures
- Campus: Rimini
- Corso: First cycle degree programme (L) in Economics and Business Administration (cod. 0033)
Learning outcomes
The course aims at providing the tools and skills needed to correctly represent and solve common financial problems
The course deals, in particular, with future and present values, interest rates and discount rates, with the valuation of investments and the analysis of bond yields, with the term structure of interest rates, and with the basic concepts of Finance
Course contents
Time value of money. Compounding and discounting single sums: future value and present value, interest and discount factor. Simple interest. Compound interest and compound discount. Equivalent rates. Nominal and effective annual interest rates. Continuous compounding.
Annuities and amortization of a debt. Ordinary annuity and annuity due. The present value and the future value of an annuity. Perpetuity. Amortization with constant instalments and with constant principal payments. Outstanding principal. Amortization plan.
Evaluation of financial operations (under certainty). Methods for investment evaluation and choice. Discounted Cash Flow (DCF) and Internal Rate of Return (IRR): definition, properties and financial meaning. Annual Percentage Rate.
Bond valuation. Spot rates and forward rates. Term structure of interest rates. Duration.
Readings/Bibliography
D. Lovelock, M. Mendel, A.L. Wright, An Introduction to the Mathematics of Money: Saving and Investing. Springer, 2007.
S.A. Broverman, Mathematics of Investment and Credit (3rd edition ), Actex Publications, 2004.
D.G. Luenberger, Investment Science, Oxford University Press, 1998.
Teaching methods
Classroom lessons
The exercises and problems presented and discussed in the classroom are essential to properly understand all the parts of the program. In the written exam, the student will be required to solve specific exercises using the tools and techniques learnt in the classroom
Assessment methods
The examination consists of a written part and an oral part
The written exam is open book and students are welcome to bring their own reference material (books, notes, scientific calculator), for strictly personal use. No one will be allowed to exit the classroom after the written exam has begun.
Only students who pass the written part will be admitted to the oral exam, to be taken only in the scheduled dates. Students who do not take the oral examination in the scheduled date will be deemed to have withdrawn from the exam
The oral exam consists of two phases
A a discussion of the written exam, during which the student will be required to justify his/her answers to the exercises
B an interview about the main theoretical results, their applications, and topics which require a more in-depth knowledge of the subject.
Students are allowed to stop the oral exam just after phase A, if they estimate that their overall performance should not be worth more than 18/30
Office hours
See the website of Roberto Dieci