Financial mathematics course overview

This four module course demonstrates how a number of financial mathematics formulas can be used to conduct detailed analysis on a set of data and/or variables.

Discounted cash flows

In this first module, we explore the concept of the “time value of money”. The module focuses on how to calculate present values and future values using compounding and discounting techniques. The module then goes on to outline how the present values of annuities, perpetuities, and growing perpetuities can be calculated. Each concept is reinforced with practical and applied exercises and case studies. By the end of this module, you will have a solid understanding of how discounted cash flows techniques are used to evaluate future cash flows.

• Understand the concept of the time value of money
• Explain terms such as present value, future value, NPV, DCF, annuities, and perpetuities
• Use DCF techniques to calculate present values
• Calculate the present value of cash flow streams such as annuities and perpetuities

Bond pricing and yields

In this financial mathematics module, we explore bond pricing and yields. The module begins by explaining how to calculate the price of a bond using discounted cash flows. The module then goes on to outline how various yields (such as the current yield and the yield to maturity) are calculated. The module also explains the relationship between bond prices and yields as well as how to identify whether a bond is trading at par, at a premium, or at a discount. Each concept is reinforced with practical and applied exercises and case studies. By the end of this module, you will have a solid understanding of how bonds are priced and yields calculated.

• Use DCF to find the price of an annual or semi-annual bond
• Calculate the different yields used to assess bond returns
• Understand the relationship between bond prices and yields
• Identify whether a bond is trading at par, premium, or discount

Statistics & financial mathematics

In this module, we explore key statistical measures. The module begins by explaining how to calculate measures of central tendency including the arithmetic mean and expected values. The module then goes on to outline how simple and weighted moving averages are calculated. The module also explains how to calculate different types of statistical dispersion such as range, variance, and standard deviation. Each concept is reinforced with practical and applied exercises and case studies. By the end of this module, you will have a solid understanding of how to calculate key statistical measures.

• Learn to calculate different measures of central tendency including arithmetic mean, weighted mean, WACC, and expected values
• Calculate simple moving and weighted moving averages
• Calculate different types of statistical dispersions such as range, variance, and standard deviation

Covariance, correlation, and regressions

In this financial mathematics module, we examine the mathematical relationship between two variables. The module begins by explaining how covariance and correlation are defined and calculated. The module then moves on to explain how regression analysis is used to estimate the value of one variable based on another. The module also explains the regression equation, outlines how to interpret the coefficient of determination, and explains how to access the regression tools in Excel. Each concept is reinforced with practical and applied exercises and case studies. By the end of this module, you will have a solid understanding of how to calculate and interpret covariance, correlation, and the results of regression analysis.

• Use correlation and covariance to describe the relationship between two variables
• Calculate covariance and correlation using Excel
• Use regression analysis to describe the relationship between two variables
• Undertake regression analysis in Excel and interpret the results

Who should take this financial mathematics course?

This course is specifically designed for finance professionals working in investment banking, equity research, corporate development, investment management, finance, and accounting.