• Offered by Rsch Sch of Finance, Actuarial Studies & App Stats
  • ANU College ANU College of Business and Economics
  • Course subject Statistics
  • Areas of interest Actuarial Studies, Finance, Statistics
  • Academic career UGRD
  • Course convener
    • Abhinav Mehta
    • Dr Chong It Tan
  • Mode of delivery In Person
  • Co-taught Course
  • Offered in First Semester 2020
    Second Semester 2020
    See Future Offerings

This course provides an introduction to the valuation of cash flows. Topics include: 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.

Learning Outcomes

Upon successful completion, students will have the knowledge and skills to:

  1. Define and describe 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. Describe various types of annuities and perpetuities and use them to solve financial transaction problems;
  3. Describe equations of value and various tools like linear interpolation & annuity tables;
  4. Compare capital budgeting decision tools like Net Present Values, Internal Rates of Return and Discounted Payback Periods;
  5. Analyse 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 arbitrage and its use in the valuation of forward contracts, including employing term structure of interest rates to calculate forward and spot rates; and
  7. Define interest rate risk in terms of duration and convexity of fixed interest products, using this to define immunisation and assess its use in mitigating interest rate risk.

Indicative Assessment

  1. Typical assessment may include, but is not restricted to: exams, assignments, quizzes, presentations and other assessment as appropriate (100) [LO 1,2,3,4,5,6,7]

The ANU uses Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. While the use of Turnitin is not mandatory, the ANU highly recommends Turnitin is used by both teaching staff and students. For additional information regarding Turnitin please visit the ANU Online website.

Workload

Students are expected to commit 130 hours of work in completing this course. This includes time spent in scheduled classes and self-directed study time.

Inherent Requirements

Not applicable

Requisite and Incompatibility

To enrol in this course you must have completed STAT1003 or STAT1008.

Prescribed Texts

Information about the prescribed textbook will be available via the Class Summary.

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
Note: Please note that fee information is for current year only.

Offerings, Dates and Class Summary Links

The list of offerings for future years is indicative only.
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
2397 24 Feb 2020 02 Mar 2020 31 Mar 2020 29 May 2020 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
7690 27 Jul 2020 03 Aug 2020 31 Aug 2020 30 Oct 2020 In Person N/A

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