The course aims to provide the basic elements of financial mathematics and classical valuation of bonds (items which have become indispensable in many of the sectors in which a graduate in Economics may operate), and aims to teach to perform the most common financial calculations (valuation of flows, amortization schedules, bonds, spot and forward interest rate structures). To this end, the basic concepts of standard financial mathematics are introduced, with examples and applications related to practices commonly used in workplaces and in financial markets.

Course outline:
The basic rules for financial compounding.
Interest rates estimation.
Annuities and financial flows
Redemption plan of indebtedness, with several applications.
Valuation and management of fixed income securities
Duration and Yield curve estimation
Selection criteria of riskless financial flows

Basic Financial Transactions Elementary: The Interest in Simple, Actuarial and Compound Regime, Comparison of three Financial arrangements, equivalent exchange rates.
Annuities and Constitution Capital: with fixed rates with variable rates.
Amortization: General requirements. Particular Amortization schedules. Amortization of capital with constant capital rates (Italian), with constant annuity (French). Amortization plan with two rates (American type). Other repayment plans. Leasing. Settlement value.
Evaluation of financial flows: Value, Makeham formula. Evaluation Criteria of Investment. Net Present value Criterion (NPV). Internal Rate of yield or cost (IR). Comparison between NPV and IR.
Arithmetic Average Maturity. Financial Average Maturity. Duration. Flat Duration and Modified Duration. Convexity.
Bonds and related properties.

Mathematics

It is expected the learning of the basic elements of classical mathematical finance leading to the knowledge and understanding of this subject and to its use and application in the framework of different contexts. The ability of the autonomous use of the financial techniques in several activities and works in this sector are also expected, as well as making autonomous judgements ability, learning and communication abilities.

The teaching material prepared by the lecturer in addition to recommended textbooks (such as for instance slides, lecture notes, exercises, bibliography) and communications from the lecturer specific to the course can be found inside the Moodle platform › blended.uniurb.it

Course books

Chapter 1,2,3,4,5 from “R.L. D’ecclesia e L. Gardini, Appunti di matematica finanziaria. Giappichelli, Last Edition

or in alternative:

Castagnoli, Cigola, Peccati, "Financial Calculus with applications" EGEA, Milano, 2013

Assessment

The exam consists of two written tests. A practical test consisting of 3 exercises to be carried out in an hour and a half. A student is allowed to the theory test if the practical test is passed with a minimum score of 16/30. The theory test consists of four open questions concerning the points listed in the program and assessing from 0 to 7.5 points each question. The final rating is determined by considering both the exercises and the theory test.

Disability and Specific Learning Disorders (SLD)

Students who have registered their disability certification or SLD certification with the Inclusion and Right to Study Office can request to use conceptual maps (for keywords) during exams.

To this end, it is necessary to send the maps, two weeks before the exam date, to the course instructor, who will verify their compliance with the university guidelines and may request modifications.