Financial Mathematics

6 unitsSem 1Sem 2In Person

Rsch Sch of Finance, Actuarial Studies & App Stats · ANU College of Business and Economics

About this course

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

1Define 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.
2Describe in detail the various types of annuities and perpetuities and use them to solve financial transaction problems.
3Derive equations of value and various tools like linear interpolation and annuity tables.
4Communicate the difference in capital budgeting decision tools like Net Present Value, Internal Rates of Return and Discounted Payback Periods.
5Analyse in depth basic fixed interest financial transactions like Loan Valuation, Fixed Interest securities (e.g. Bonds) and employ the skills developed in this course to evaluate such transactions. Incorporate the effects of taxation on such financial transactions.
6Demonstrate advanced knowledge of the term structure of interest rates and its applications in forward and spot rates.
7Define in detail the 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.

Assessment

Weights and hurdle requirements come straight from the imported ANU record.

Typical assessment may include, but is not restricted to: exams, assignments, quizzes, presentations and other assessment as appropriate

Learning outcomes 1, 2, 3, 4, 5, 6, 7

100%

Study expectations

Study information

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.

Texts and reading

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

Related courses

STAT2032

Related ANU course

Co taught

Course essentials

Academic year: 2026
Course subject: STAT
Subject name: Statistics
Academic career: PGRD
School: Rsch Sch of Finance, Actuarial Studies & App Stats
College: ANU College of Business and Economics
Convener: Jacie Liu - Lucy Hu
Delivery: In Person
Unit value: 6 units
EFTSL: 0.125
Last source update: Not listed

View the ANU course source

Fees

Domestic fee paying students: Domestic · 2026 · Course basis; $4,920
International fee paying students: International · 2026 · Course basis; $7,020
Student Contribution Band Code 1: Commonwealth supported · 2026; ANU contribution-band code 1

Areas and attributes

Areas of interest

Actuarial StudiesFinanceStatistics