Students will meet the mathematics underlying annuities and mortgage loans. The course will treat how to compare possible business projects and draw conclusions.
In the beginning of the course students learn the basics of financial mathematics: simple and compound interest, equations of value, annuities. Later these concepts are used to analyze credits, loans and mortgages. Aspects of financial planning are discussed next: amortization, capital budgeting, depreciation and depletion, comparison of different business projects.
In the second part of the course (after the midterm exam) students learn how to perform break-even analysis. Statistical methods to assess financial risk are also analyzed: expected rate of return, covariance and standard deviation. In addition, problems related to portfolio risk and portfolio return are considered. Finally, the CAPM model is analyzed.