Fall 2014, FINA-2210A Interest Theory and Finance
Chapter 5 Loans and Costs of Borrowing (Amortization and Sinking Fund)
Introduction
This chapter discusses two methods of repaying a loan:
(a) The amortization method: borrower repays the lender via period
Chapter 4
Rates of Return
February 4, 2015
Chapter 4: Rates of Return
Learning Objectives
1. Internal rate of return (yield rate)
2. One-period rate of return of a fund: time-weighted rate of return and
dollar-weighted (money-weighted) rate of return
3. R
Chapter 5
Loans and Costs of Borrowing
January 3, 2015
Chapter 5: Loans and Costs of Borrowing
Learning Objectives
1. Loan balance: prospective method and retrospective method
2. Amortization schedule
3. Sinking fund
4. Varying installments and varying in
Chapter 3
Spot Rates, Forward Rates and
the Term Structure
January 3, 2015
Chapter 3: Spot Rates, Forward Rates and the Term Structure
Learning Objectives
1. Spot rate of interest
2. Forward rate of interest
3. Yield curve
4. Term structure of interest ra
Chapter 2 (Part B)
More General Annuities
January 3, 2015
Chapter 2 (Part B): More General Annuities
A. Payment period dierent from interest period
1. Payment period is longer than interest period
Illustration 1:
Given that j1 = 1% (eective rate of intere
Chapter 1
Interest Accumulation and
Time Value of Money
January 2, 2015
Chapter 1: Interest Accumulation and Time Value of Money
A. Introduction
1. Basic Concept
Time value of money means that $1 received today is not
equivalent to (usually worth more th
Chapter 2 - PART A:
Basic Annuities
January 3, 2015
Chapter 2 (Part A): Basic Annuities
A. Introduction
1. Denition
An annuity is dened as a series of payments made at equal
intervals of time.
An annuity-certain means that payments are certain to be
mad
Semester II 2014/15
THE CHINESE UNIVERSITY OF HONG KONG
FINA 2210B/C Interest Theory and Finance
Instructor:
Professor Wai-Sum Chan (Email: chanws@cuhk.edu.hk)
Tutor: Miss Iris Au (Email: irisau@baf.cuhk.edu.hk)
Course Website: https:/elearn.cuhk.edu.hk/w
FINA 2210B/C Interest Theory & Finance
TEST
Date & Day:
10 March 2015 (Tueday)
Time:
18:15-19:30 (75 minutes): Students should arrive at 18.05
Time (Amended): 18:30-19:45 (75 minutes): Students should arrive at 18.20
Venue:
LT5, Lee Shau Kee Building LSK
Semester I 2016/17
THE CHINESE UNIVERSITY OF HONG KONG
FINA 2210A Interest Theory and Finance
Tuesday 10:30 12:15 (WMY505), Thursday 13:30 14:15 (WMY408)
Instructor:
Professor Wai-Sum Chan (Email: chanws@cuhk.edu.hk)
Tutor: Miss Iris Au (Email: irisau@baf
Chapter 4 Rates of Return January 11, 2016 Chapter 4: Rates of Return Learning
Objectives 1. Internal rate of return (yield rate) 2. One-period rate of return of a fund:
time-weighted rate of return and dollar-weighted (money-weighted) rate of return 3.
R
Chapter 3 Spot Rates, Forward Rates and the Term Structure January 11, 2016
Chapter 3: Spot Rates, Forward Rates and the Term Structure Learning Objectives 1.
Spot rate of interest 2. Forward rate of interest 3. Yield curve 4. Term structure of
interest r
Chapter 2 - PART A: Basic Annuities January 11, 2016 Chapter 2 (Part A): Basic
Annuities A. Introduction 1. Definition An annuity is defined as a series of payments
made at equal intervals of time. An annuity-certain means that payments are
certain to be
Chapter 2 (Part B) More General Annuities January 11, 2016 Chapter 2 (Part B): More
General Annuities A. Payment period different from interest period 1. Payment
period is longer than interest period Illustration 1: Given that j1 = 1% (effective rate
of i
Chapter 1 Interest Accumulation and Time Value of Money January 11, 2016 Chapter
1: Interest Accumulation and Time Value of Money A. Introduction 1. Basic Concept
Time value of money means that $1 received today is not equivalent to (usually
worth more t
Chapter 6
Bonds and Bond Pricing
January 3, 2015
Chapter 6: Bonds and Bond Pricing
Learning Objectives
1. Types, features and risks of bond investments
2. Formulas for pricing a bond
3. Construction of bond amortization schedules
4. Pricing a bond between
Chapter 7
Bond Yields and the Term Structure
February 4, 2015
Chapter 7: Bond Yields and the Term Structure
Learning Objectives
1. Yield to maturity, yield to call and par yield
2. Realized compound yield and horizon analysis
3. Estimation of the yield cu
Chapter 8
Bond Management
January 3, 2015
Chapter 8: Bond Management
Learning Objectives
1. Macaulay duration and modied duration
2. Duration and interest-rate sensitivity
3. Convexity
4. Some rules for duration calculation
5. Asset-liability matching and
Spring 2015
THE CHINESE UNIVERSITY OF HONG KONG
FINA2210 B/C Interest Theory and Finance
Assignment No. 2 (for Chapters 3 and 4)
Deadline: 16 March 2015 (5:00pm Sharp)
1. You are given the following information: iS1 = 2.1%, iF2 = 2.6%, iS3 = 3.1% and iF4
Spring 2015
THE CHINESE UNIVERSITY OF HONG KONG
FINA2210 B/C Interest Theory and Finance
Assignment No. 3 (for Chapter 5)
Deadline: 25 March 2015 (5:00pm Sharp)
1. A loan of $12,000 is being repaid with payments of $1,500 at the end of each year for 10 ye
Spring 2015
THE CHINESE UNIVERSITY OF HONG KONG
FINA2210 B/C Interest Theory and Finance
Assignment No. 4 (for Chapters 6 and 7)
Deadline: 10 April 2015 (5:00pm Sharp)
1. An investor buys two 20-year bonds, each having semiannual coupons and each maturing
Spring 2015
THE CHINES UNIVERSTY OF HONG ONG K
FINA2210 B/C ters In Theory and Finace
t Asignme No. 5 (for hapterC 8)
Deadlin: 17 April 2015 (5:00pm Sharp)
* hisT is the LAST
t asignme for the course *
1. A company needs to pay a yearly cash-flow stream a
Spring 2015
THE CHINESE UNIVERSITY OF HONG KONG
FINA 2210 B/C Interest Theory and Finance
Assignment No. 1 (for Chapters 1 & 2)
Deadline: 2 March 2015 (5:00pm Sharp)
You MUST submit hardcopy of your assignment to the dropbox located in the 2/F of
Cheng Yu
FINA 2210 A Interest Theory and Finance
Assignment No. 1 (for Chapters 1 & 2)
1. Assume that a(t) = ln(0.5t 2 + e) + 0.05t 0.3 , (a) find i2 and i3. (b) find d3 and d4.
(c) find the amount of interest earned during the third period if the principal is
$1,
FINA2210C Interest Theory and Finance
Assignment No. 2 (for Chapters 3 and 4)
1. You are given the following information: i S 1 = 1.1%, iF 2 = 1.6%, iS 3 = 2.1% and i F
4 = 2.6%. (a) Calculate the rates of interest i F 1 , iS 2 , iF 3 and i S 4 . (b) Calc
FINA2210A Interest Theory and Finance
Assignment No. 4 (for Chapters 6 and 7)
1. An investor buys two 20-year bonds, each having semiannual coupons and each
maturing at par. For each bond the purchase price produces the same yield rate. One
bond has a par
FINA2210A Interest Theory and Finance
Assignment No. 3 (for Chapter 5)
1. A loan of $12,000 is being repaid with payments of $1,500 at the end of each year
for 10 years. These payments can earn interest at an effective rate of 6% per annum.
At the end of
THE CHINESE UNIVERSITY OF HONG KONG FINA2210A Interest Theory and Finance
Assignment No. 5 (for Chapter 8) Deadline: 05 December 2016 (5:00pm Sharp)
*Note: Only the highest four scores from your five assignments will be used to
calculate your course grade