FINANCIAL MATHEMATICS

The module tackles the subjects and problems of the classical Financial Mathematics and aims at providing theoretical notions and operational capacities that enable to solve the main financial problems in conditions of certainty that arise in business and financial markets.

1. Theoretical knowledge: by the end of the course, students will be able
to:
- acquire the basic vocabulary needed to allow students to engage with theoretical and practical problems related to the valuation of
debts and financial investments,
- understand essential literature on debts and financial investments instruments and their markets,
- define the fundamental features of debts and investments (loans, mortgages, leasing, coupons and zero-coupon bonds),
- appreciate the importance of assessing risks and costs inherent with financial investments and debts.

2. Theoretical, applied, and methodological skills and competences: by
the end of the course, students will be able to:
- identify the relevant aspects of a problem or specific risk to hedge,
- organize and integrate data and information needed to find a solution,
- compare models and financial tools discussed during the course,
- solve evaluation problems.

3. Judgment and decision-making skills: by the end of the course, students are expected to be able to:
- choose the most convenient alternative,
- apply the method which is more aligned to the problem under study.

4. Communication skills:
- present in writing analyses and results of practical and theoretical problems and solution to exercises,
- use the students' forum (on moodle.unive.it) to discuss further problems and exercises.

5. Learning capability: the student is expected to:
- study the book indicated in the references and possibly to read the assigned chapters before classes,
- take notes,
- solve further exercises available online and at the end of the book.

Mandatory priority exam: see https://www.unive.it/web/en/4624/exams

1. Basics of interest rates
2. Interest rates
3. Annuities
4. Amortization of a debt
5. Bonds
6. Criteria for the evaluation of fixed financial projects
7. Introduction to Forwards e Futures

A. BASSO, P. PIANCA, Introduzione alla Matematica Finanziaria (3rd ed.), Wolters Kluwer, 2017

M. CORAZZA, L'n-esimo eserciziario di Matematica Finanziaria, Giappichelli, 2017

Further readings and exercises are available on-line at moodle.unive.it

A written examination. The exam will propose a series of theoretical questions and exercises aimed at verifying the skills described above.
Optional Homework (group work): max 4 points

written

The written exam is graded on a scale from 0 to 30, with honors ("cum laude") as a possible distinction.
The optional homework (group work) can contribute up to a maximum of 4 additional points. The minimum passing grade for the exam is 18.

The exam consists of a series of numerical and theoretical exercises. To pass the written exam, it is necessary to correctly answer the mandatory questions in the first part (worth 10 points) and at least two questions from the second part.
To achieve a mid-range grade, most questions must be completed without conceptual errors.
To obtain the highest grade, all exercises must be completed correctly.

Grading rubric:

Grades between 18 and 22 will be awarded in the presence of:
Sufficient knowledge and understanding with respect to the syllabus;
Limited ability to gather and/or interpret data and to formulate independent judgments;
Sufficient communication skills, particularly in the use of subject-specific language.

Grades between 23 and 26 will be awarded in the presence of:
Fair knowledge and understanding with respect to the syllabus;
Fair ability to gather and/or interpret data and to formulate independent judgments;
Fair communication skills, particularly in the use of subject-specific language.

Grades between 27 and 30 will be awarded in the presence of:
Good to excellent knowledge and understanding with respect to the syllabus;
Good to excellent ability to gather and/or interpret data and to formulate independent judgments;
Full command of communication skills, particularly in the use of subject-specific language.

Honors ("cum laude") will be awarded in the presence of excellent knowledge and understanding of the syllabus, outstanding judgment skills, and excellent communication abilities.

Standard theoretical lectures, exercises on the arguments carried out, tutoring.

Further readings can be found on the e-learning platform Moodle.
The moodle page also reports the precise list of examinable material.