231TopicList

# 231TopicList - Overview for Actsc 231 Mathematics of...

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Overview for Actsc 231: Mathematics of Finance Important Note: This overview note aims at assisting students in studying their exams, but does NOT reflect or imply any materials in the exam. Students are responsible for understanding ALL materials in the class notes, the tutorial, the MapleTA materials and the quizzes. Students are also encouraged to check UW-ACE regularly for announcements. Chapter 1: The growth of money - understanding the time value of money - accumulation function a ( t ) with general force of interest δ t (special cases include simple interest and compound interest) - effective rate of interest over a period [ t 1 , t 2 ] - (for compound interest) conversion among effective rates of interest/discount, nominal rates of interest/discount and force of interest - present value of cashflows using discount function v ( t ) = 1 /a ( t ) - calendar usage (exact method, 20/360 rule, bankers’ rule) - understanding inflation and the purchasing power of money Chapter 2: Equations of value and fund performance - equations of value: PV of income = PV of outgo (called yield equation when interest rate is unknown)

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