Compound interest functions; valuation of annuities certain; loans repayable by instalments; comparison of value and yield of cash flow transactions; valuation of fixed interest securities, with and without tax on interest and capital gains; duration and volatility of securities; introduction to concept of immunisation and matching; consumer credit contracts; introduction to stochastic interest rate models.
Learning Outcomes
Upon successful completion, students will have the knowledge and skills to:
To achieve an understanding of and facility in:
- Cashflow models. Simple and compound interest. Accumulated and present values.
- Nominal and effective rates of interest and discount, and the force of interest.
- Introduction to annuities and their valuation. Perpetuities. Continuous, increasing, decreasing and indexed annuities.
- Equations of value. Introduction to linear interpolation and annuity tables. Dealing with inflation.
- Loan valuation and payments.
- Capital budgeting including NPV, IRR and DPP. Measuring investment performance. TWRR and MWRR.
- Valuation of fixed interest securities, with and without tax on interest and capital gains. Calculating yields. Allowing for callable features and inflation. Extending to property and share valuation.
- Arbitrage and valuation of forward contracts. Yield curve and term structure of interest rates. Calculating forward and spot rates.
- Interest rate risk: duration, effective duration and convexity. Conditions for and determination of immunisation.
- Introduction to stochastic interest rate models.
Other Information
See the course outline on the College courses page. Outlines are uploaded as they become available.
Indicative Assessment
In-class Quizzes : 30%
Final examination: 70%
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Workload
Three contact hours per week plus at least 7 hours private study time.
Requisite and Incompatibility
Majors
Fees
Tuition fees are for the academic year indicated at the top of the page.
If you are a domestic graduate coursework or international student you will be required to pay tuition fees. Tuition fees are indexed annually. Further information for domestic and international students about tuition and other fees can be found at Fees.
- Student Contribution Band:
- 2
- Unit value:
- 6 units
If you are an undergraduate student and have been offered a Commonwealth supported place, your fees are set by the Australian Government for each course. At ANU 1 EFTSL is 48 units (normally 8 x 6-unit courses). You can find your student contribution amount for each course at Fees. Where there is a unit range displayed for this course, not all unit options below may be available.
| Units | EFTSL |
|---|---|
| 6.00 | 0.12500 |
Course fees
- Domestic fee paying students
| Year | Fee |
|---|---|
| 2015 | $3414 |
- International fee paying students
| Year | Fee |
|---|---|
| 2015 | $4146 |
Offerings, Dates and Class Summary Links
ANU utilises MyTimetable to enable students to view the timetable for their enrolled courses, browse, then self-allocate to small teaching activities / tutorials so they can better plan their time. Find out more on the Timetable webpage.
Class summaries, if available, can be accessed by clicking on the View link for the relevant class number.
First Semester
| Class number | Class start date | Last day to enrol | Census date | Class end date | Mode Of Delivery | Class Summary |
|---|---|---|---|---|---|---|
| 1910 | 16 Feb 2015 | 06 Mar 2015 | 31 Mar 2015 | 29 May 2015 | In Person | N/A |
Second Semester
| Class number | Class start date | Last day to enrol | Census date | Class end date | Mode Of Delivery | Class Summary |
|---|---|---|---|---|---|---|
| 2814 | 20 Jul 2015 | 07 Aug 2015 | 31 Aug 2015 | 30 Oct 2015 | In Person | N/A |