Financial Calculus

Accounting, Publication in the Diário da República - Despacho nº 13772/2014 - 12/11/2014

5 ECTS; 2º Ano, 1º Semestre, 60,0 TP

- Luís António Antunes Francisco

This module has no formal pre-requisites though the prior attendance of introductory modules in mathematics would be a helpful foundation.

- Calculate present and future values of one or more capitals, solving problems related to such operations;
- Equate and distinguish different types of annuities, solving problems;
- Solve problems attending to different payment modalities of a loan.

1. Introduction
- Basic concepts.
- Interest rate and discount rate.
- Present value and future value.

2. Capitalization processes
- Simple interest scheme.
- Banking discount and reform of trade bills.
- Compound interest scheme.
- Nominal and effective rates, proportional and equivalent rates.
- Current and real rates.
- Capitalization in the domain of continuous.

3. Annuities
- Concept and modalities.
- Annuities with constant terms.
- Entire and temporary annuities.
- Fractional and temporary annuities.
- Perpetual annuities.
- Annuities with terms in Arithmetic Progression.
- Annuities with terms in Geometric Progression.

4. Loan amortizations
- Concept and modalities.
- Reimbursement in constant annuities.
- Reimbursement in constant periodic capital amortization.
- Other modalities and variants.
- Bond loans.

Evaluation Methodology
Continuous evaluation:
- Six mini-tests during the class period, with a quotation of 5 values each, of which the best four count towards the Final Grade (weighing 40%).
- Final test (weighing 60%).
Final Grade less than 10 => Exam (in accordance with the Academic Regulation and with a weight of 100%).

- Rodrigues, A. e Nicolau, I. (2010). Elementos de Cálculo Financeiro. Lisboa, Portugal: Áreas Editora
- Quelhas, A. (2014). Manual de Matemática Financeira. Coimbra, Portugal: Livraria Almedina
- Barroso, M. e Crespo, N. e Couto, E. (2009). Cálculo e Instrumentos Financeiros, da Prática para a Teoria. Lisboa, Portugal: Escolar Editora
- Matias, R. (2015). Cálculo Financeiro, Teoria e Prática. Lisboa, Portugal: Escolar Editora

Method of interaction
- Traditional lecturing methods supported by audiovisual resources.
- Practical exercises.
- Six short class-tests during term-time and a final test.

Software used in class
Not applicable.