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:
Upon successful completion of the requirements for this course, students should have the
knowledge and skills to:
1. Define and describe in detail the use of cash flow models, simple and compound rates of interest and discount as well as compare and distinguish between nominal and effective rates of interest and discount.
2. Have a thorough knowledge of the various types of annuities and perpetuities and use them to solve financial transaction problems.
3. Derive equations of value and various tools like linear interpolation & annuity tables.
4. Be able to communicate the difference in capital budgeting decision tools like Net Present Values, Internal Rates of Return and Discounted Payback Periods.
5. Analyse in depth basic fixed interest financial transactions like Loan Valuation, Fixed Interest securities (eg. Bonds) and employ the skills developed in this course to evaluate such transactions. Incorporate the effects of taxation on such financial transactions.
6. Explain the details of arbitrage and its use in the valuation of forward contracts. Employ term structure of interest rates to calculate forward and spot rates.
7. Define interest rate risk in terms of duration and convexity of fixed interest products. Define immunisation and assess its use in mitigating interest rate risk
8. Be able to communicate the basics of stochastic interest rate models and use it to evaluate simple cash flow 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
10 hours per week.
Requisite and Incompatibility
Specialisations
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 |
|---|---|
| 2016 | $3480 |
- International fee paying students
| Year | Fee |
|---|---|
| 2016 | $4638 |
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 |
|---|---|---|---|---|---|---|
| 2767 | 15 Feb 2016 | 26 Feb 2016 | 31 Mar 2016 | 27 May 2016 | 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 |
|---|---|---|---|---|---|---|
| 8589 | 18 Jul 2016 | 29 Jul 2016 | 31 Aug 2016 | 28 Oct 2016 | In Person | N/A |