FINANCIAL MATHEMATICS PROBLEMS FOR BUSINESS

This course is among the main activities for the Accounting and Finance track of the second-level degree in "Management". Consistently with its educational objectives, the course covers concepts and methods from financial mathematics and aims at providing notions and operational abilities to analyse and solve standard financial problems arising in business. Some attention is devoted to developing computational skills used to solve case studies and examples (typically, via spreadsheet financial functions).

Knowledge and understanding skills.
Attendance and active participation at lectures and, related activities, as well as individual study, allow the student to acquire the following educational targets:
- knowing and using concepts necessary to describe and understand financing and investment instruments available to the firms;
- handling the mathematical techniques and methods useful to formalize financial decisions.

Ability to apply knowledge and understanding.
Attendance and active participation at lectures and related activities, as well as individual study, allow the student to acquire the following skills:
- ability to use quantitative tools in modeling and evaluating financial operations;
- ability to select the most appropriate technique for solving the concrete problem in hand;
- ability to analyze and discuss specific financial situations presented in the form of case studies.

Judgment skills, communication skills, learning skills.
At the end of the course, the student should be able to:
- formulate rational justifications and properly argue for the approach used to analyze financial problems and the related quantitative models;
- understand relative strengths and weaknesses of different approaches;
- formulate and communicate an adequate analysis and financial interpretation for the mathematical models and techniques.

Standard topics covered in the bachelor courses of Mathematics and Computational tools for Economics and Management are assumed to be known.
Previous exposure to probability notions is very helpful.

Part A: Interest rate measurement; valuation of annuities; loan repayment; bond valuation.
Part B: Rate of return for an investment; term structure of interest rates; duration and immunization; real options.
Part C: Interest rate swaps; equity investments and financial derivatives; financial options.

S. A. Broverman (2017), Mathematics of investment and credit, 7th edition, ACTEX.

Evaluation is based on a final written exam. The exam contains two multiple-answer and one open question for each of the three parts; therefore, it totals six multiple-answer and three open questions. Each multiple-answer question is worth 2 points. Each open question is worth 6 points.

Fifteen lectures, five for each of the three parts.

English

Students are required to register for the course on the moodle platform of the university (moodle.unive.it).

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