Upon successful completion of the course, students will be able to:

Explain and compare the various types of interest rates — including effective, nominal, force of interest, real, and money rates — and their relationship to discount rates.
Compute present and future values, as well as annuities, under both constant and varying interest rate conditions, and for cash flows that are irregular or non-level.
Apply the principles of the time value of money to analyze and solve practical financial situations.
Evaluate and interpret measures of duration, convexity, and immunization in the management of cash flows.
Formulate and apply the equation of value to address a wide range of financial problems.

Lecture notes

Interest rates and present value,
Cash flows and annuities,
Loans and loan schedules,
Yields,
Measuring fund performance,
Net present values,
Real and nominal interest rates,
Force of interest and continuously paid cash flows,
Fixed interest and index-linked securities,
Term structure of interest rates,
Duration, convexity and immunization

Written exam